What is the value of share of your company stock

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You own a company that competes with Old World DVD Company. Instead of selling DVDs, however, your company sells music downloads from a Web site. Things are going well now, but you know that it is only a matter of time before someone comes up with a better way to distribute music. Your company just paid a $1.91 per share dividend, and you expect to increase the dividend 12 percent next year. However, you then expect your dividend growth rate to begin going down—to 6 percent the following year, 2 percent the next year, and to -3 percent per year thereafter. Based upon these estimates, what is the value of a share of your company’s stock? Assume that the required rate of return is 12 percent.

Value of a share in $

Reference no: EM132014356


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