What is estimate of the stock current value

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Agarwal Technologies was founded 10 years ago. It has been profitable for the last 5 years, but it has needed all of its earnings to support growth and thus has never paid a dividend. Management has indicated that it plans to pay a $0.25 dividend 3 years from today, then to increase it at a relatively rapid rate for 2 years, and then to increase it at a constant rate of 8.00% thereafter. Management's forecast of the future dividend stream, along with the forecasted growth rates, is shown below. Assuming a required return of 11.00%, what is your estimate of the stock's current value?

Year 0 1 2 3 4 5 6

Growth rate NA NA NA NA 50.00% 25.00% 8.00%

Dividends $0.000 $0.000 $0.000 $0.250 $0.375 $0.469 $0.506

Reference no: EM132605015

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