What is the value of ned stock to an investor

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Reference no: EM131985295

The earnings and dividends of Ned Computer Co. are expected to grow at an annual rate of 15 percent over the next 4 years and then slow to a constant growth rate of 8 percent per year. Ned currently pays a dividend of $1 per share. What is the value of Ned stock to an investor who requires a 12 percent rate of return?

1) Calculate dividend for year 1 ~ 4

2) Terminal value at the end of year 4

3) Current price is the sum of pv of dividend and terminal value.

Reference no: EM131985295

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