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Nonconstant dividend growth valuation

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Nonconstant Dividend Growth Valuation

A company currently pays a dividend of $2 per share (D0 = $2). It is estimated that the company's dividend will grow at a rate of 18% per year for the next 2 years, and then at a constant rate of 6% thereafter. The company's stock has a beta of 1.8, the risk-free rate is 7.5%, and the market risk premium is 4%. What is your estimate of the stock's current price? Do not round intermediate calculations. Round your answer to the nearest cent.

 

 

Reference no: EM132956729

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