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What is the stock price per share

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Reference no: EM133067801

Use the following data to calculate your stock value. Assume you use the historical geometric average growth rate (rounded to 2 decimals) for initial growth rate for 4 years. Then you believe it will drop to constant growth rate of 7% per year indefinitely.

  • There are 5million shares outstanding.
  • T-bill rate was 3.2%, S&P500 mkt return was 6.61%, and beta of this company is 1.2.

YEAR

DIVIDEND (*M represent millions)

2015

$1.10M 

2016

$1.60M

2017

$2.20M

2018

$3.00M

2019

$3.90M

2020

$5.00M
  • FYI, the most recent dividend payment information can be found in dividend data above. That is, 2020 dividend is the most recently paid dividend. which is $5M

QUESTION #1. What is the stock price per share using dividend discount model?

QUESTION #2. If the H-Model is applied, what should be the stock value per share?

Reference no: EM133067801

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