What should we pay for one share of alpha stock today

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Alpha Enterprises has just paid a dividend of $2 per share. The company then immediately announced that, due to expected cash flow issues from a large project, no dividends will be paid for the next three years. Dividends of $3, $4, and $5 per share will then be paid in each of the three years after that. Following these non-constant dividends, the company expect earnings and dividends to grow at 5% for the foreseeable future. The required return is 12% on the company's stock. What should we pay for one share of Alpha's stock today?

Reference no: EM132395507

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