A stock is expected to pay a dividend of $1.00 in year 1, $2.00 in year 2, and $3.00 in year 3 (that is, D1 = $1.00, D2 = $2.00, and D3 = $3.00). Afterwards dividends will grow at a constant rate of 5% per year. Assume the stock's required return is 13%. What is the stock price today (P0)?

Answer rating: 100% (QA)

To find the stock price today P0 using the Dividend Discount Model DDM we need to calculate the pres... View the full answer