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Estimate the value of the stock with a discount rate

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Your company has earnings of $19.7 million and is projected to grow at a constant rate of 4 percent forever because of the benefits gained from the learning curve. Currently, all earnings are paid out as dividends. The company plans to launch a new project two years from now that would be completely internally funded. The company has 9.2 million shares of stock outstanding. Estimate the value of the stock with a discount rate of 14%. NPVGO per share of the new project to be launched two years from now is estimated to be $5.9 in Year 2.

Reference no: EM132534714

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