What should be the price of the company stock today

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Problem 1: Assume today is December 31, 2018. Imagine Works Inc. just paid a dividend of $1.15 per share at the end of 2018. The dividend is expected to grow at 15% per year for 3 years, after which time it is expected to grow at a constant rate of 5.5% annually. The company's cost of equity (rs) is 10%. Using the dividend growth model (allowing for nonconstant growth), what should be the price of the company's stock today (December 31, 2018)? Do not round intermediate calculations. Round your answer to the nearest cent.

Reference no: EM132964277

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