Nonconstant growth valuation-stock current price

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Nonconstant Growth Valuation

A company currently pays a dividend of $2.75 per share (D0 = $2.75). It is estimated that the company's dividend will grow at a rate of 17% per year for the next 2 years, and then at a constant rate of 6% thereafter. The company's stock has a beta of 1.5, the risk-free rate is 7.5%, and the market risk premium is 3%. What is your estimate of the stock's current price? Round your answer to the nearest cent.

Reference no: EM131064588

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