What would you pay for share of this stock today

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You have been following a company, Kannabis for Kyds, Inc., that is about to go public this afternoon. You are fairly certain that the company is unlikely to pay any dividends for the first seven years of its operations. At the end of the eighth year, you foresee receiving $0.50 per share as a dividend. You forecast that the ninth year’s dividend will be $1.00 per share, the tenth year’s dividend will be $1.50 per share and after that dividends will grow at an annual rate of four percent forever. What would you pay for a share of this stock today if you wished to earn eighteen percent per annum on your investment?

Reference no: EM131963101

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