What should the price of terrier nation stock be today

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Reference no: EM132058261

Terrier Nation Inc. is expected to have earnings per share next year (year 1) of $20, which are expected to grow at 16%. They are planning to pay a dividend of $5 at the end of Year 4 (they do not expect to pay dividends in years 1, 2 and 3) and expect the growth rate to slow to 9%. After year 4, the dividend payout ratio and growth rate are expected to remain unchanged. If Terrier Nation’s equity cost of capital is 18%, what should the price of Terrier Nation’s stock be today?

Reference no: EM132058261

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