Non constant growth valuation

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Reference no: EM13883339

Non constant Growth Valuation

A company currently pays a dividend of $3.5 per share (D0 = $3.5). It is estimated that the company's dividend will grow at a rate of 20% per year for the next 2 years, then at a constant rate of 6% thereafter. The company's stock has a beta of 0.8, the risk-free rate is 7%, and the market risk premium is 5%. What is your estimate of the stock's current price? Do not round intermediate calculations. Round your answer to the nearest cent.

Reference no: EM13883339

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