Rate of growth thereafter similar to that of economy overall

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You are considering buying stock in Biqing, Inc., a West Texas company that provides PPO medical services. The dividend just paid (i.e., D0) was $1.00 and is expected to increase by 20% per year for two years. Growth will then slow to 10% per year for the following three years as competitors enter the market, and finally slow to a 5% per year rate of growth thereafter similar to that of the economy overall. If you require a 15% rate of return, what is the most you should be willing to pay for a share of Biqing's stock?

Reference no: EM131021017

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