You have been asked to value a company's stock. You are told to assume that the stock will pay its first dividend 7 years from today and it will be $2.00 per share (at t=7). You assume dividends will grow at a rate of 2%/yr thereafter (i.e. the t=8 dividend paid is 2% larger than the t=7 dividend, etc.,) in perpetuity (i.e.. forever).  

What should be the value of XYZ's stock under these assumptions assuming a 10% required rate of return?

Answer rating: 100% (QA)

To value XYZs stock under the given assumptions we can use the dividend discount model DDM The DDM c... View the full answer