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What is me stock price today

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Reference no: EM131401660

Madrigal Elektromotoren (ME) just paid a dividend of $1.50/share. ME has a new technology that is expected to go on the market this year, and their dividend is expected to grow at 35% per year for the next ten years (i.e., the growth rate applies only to the next ten dividend payments). After that, the dividend is expected to stay constant for the foreseeable future (i.e., forever). The next dividend will be paid exactly in one year. Assume investors require a 10% rate of return on ME stock.

a) What is ME's stock price today?

b) What is ME's stock price in twenty years from now?

Reference no: EM131401660

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