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Current price of softdrive stock

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Softdrive is a self-driving car company. It is expected to show small earnings per share (EPS) of $0.2 next year, which is expected to grow by 100% each year for the following 5 years. After that (i.e., starting in year 7), future EPS are expected to grow by 9% per year. Softdrive currently pays 40% of its earnings as dividends, and it is expected to maintain it in the future. Assuming a required return of 16% per year, what should be the current price of Softdrive's stock?

Reference no: EM132719701

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