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What price does dividend-discount model predict amiga shares

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Problem 1: Amiga Corporation has just paid an annual dividend of $1.11. Analysts are predicting a 10.5% per year growth rate in earnings over the next 7 years. After that, Amiga's earnings are expected to grow at the current industry average of 4.8% per year. If Amiga's equity cost of capital is 8.2% per year and its dividend payout ratio remains constant, for what price does the dividend-discount model predict Amiga shares should sell?

Reference no: EM132665779

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