The emu is a bird that does not fly

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The “Emu Is A Bird That Does Not Fly” company is experiencing significant growth. Dividends are growing at 15% and the company expects to stay at that rate of growth for the next 3 years. In the fourth year dividends will grow at 10% and thereafter dividends will grow indefinitely at a constant rate of 5%. The company just paid a dividend of $1.00 (i.e., an investor buying the stock today does not receive this dividend). If the required rate of return is 11%, what is the value per share of the company? How does your answer change if an investor buying the stock today is entitled to the recent $1.00 dividend?

Reference no: EM131538192

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