Nonconstant dividend growth valuation

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Nonconstant Dividend Growth Valuation

A company currently pays a dividend of $2.6 per share (D0 = $2.6). It is estimated that the company's dividend will grow at a rate of 19% per year for the next 2 years, and then at a constant rate of 6% thereafter. The company's stock has a beta of 1.6, the risk-free rate is 8%, and the market risk premium is 4.5%. What is your estimate of the stock's current price? Do not round intermediate calculations. Round your answer to the nearest cent.

Reference no: EM132645070

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