0 Vickery Technology, Inc. is experiencing a period of rapid growth so no dividend will be...

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0 Vickery Technology, Inc. is experiencing a period of rapid growth so no dividend will be paid at the end of each of the next 3 years. At the end of the fourth year (t = 4), the dividend (D4) is expected to be $1.00. The growth rate for dividends is expected to be 40 percent during the fifth and sixth years, and a constant rate of 20 percent per year thereafter. The required rate of return on the stock is 23 percent. How much would you be willing to pay for the stock today? 1 2 3 4 D4 $1.00 5 6 7 8 40%g 40%g 20%g 20%g 20%g 9 0 Vickery Technology, Inc. is experiencing a period of rapid growth so no dividend will be paid at the end of each of the next 3 years. At the end of the fourth year (t = 4), the dividend (D4) is expected to be $1.00. The growth rate for dividends is expected to be 40 percent during the fifth and sixth years, and a constant rate of 20 percent per year thereafter. The required rate of return on the stock is 23 percent. How much would you be willing to pay for the stock today? 1 2 3 4 D4 $1.00 5 6 7 8 40%g 40%g 20%g 20%g 20%g 9

Answer rating: 100% (QA)

Answer To determine the value of the stock today we can use the dividend discount model DDM which ca... View the full answer