Why does the dividend will grow at a constant rate

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Question: A company has just paid a dividend of $ 3 per share, D₀=$ 3 . It is estimated that the company's dividend will grow at a rate of 17 % percent per year for the next 2 years, then the dividend will grow at a constant rate of 6 % thereafter. The company's stock has a beta equal to 1.4, the risk-free rate is 4.5 percent, and the market risk premium is 4 percent. What is your estimate of the stock's current price? Round your answer to two decimal places.

Reference no: EM131794703

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