Assume you expect God of War Corp. to pay a dividend of $1.50 a year from today. Assume also that you expect dividends to grow by 20% per year for 5 years and then to grow at 3% per year thereafter forever. Based on these assumptions and assuming an equity cost of capital for God of War, you estimate the value of God of War's stock as $103 per share. How would assuming a higher initial growth for God of War affect your estimate of the value of God of War stock?

Answer rating: 100% (QA)

Assuming a higher initial growth rate for God of War would likely increase the estimate of the value ... View the full answer