A stock just paid an annual dividend of $4.88. The dividend is expected to grow by 12% per year for the next 5 years. It will then grow by 3% per year forever.

The required rate of return is 11%.

What is the dividend in year 5?
What is the terminal value (P5)
What is the value of the stock?

Answer rating: 100% (QA)

SOLUTION To solve this problem we can use the dividend discount model DDM which states that the valu... View the full answer