St John Medical, a surgical equipment manufacturer, has been hit hard by increased competition. Analysts predict that earnings and dividends will decline at a rate of 5% annually into the foreseeable future. If the firm’s last dividend (D0) was $2.50 and the investors’ required rate of return is 16%, what will be the company’s stock price in three years?

Answer rating: 100% (QA)

To calculate the stock price of St John Medical in three years we can use the Gordon Growth Model wh... View the full answer