Ammermann Components recently paid a dividend of $1 per share. This dividend is expected to grow at

Question:

Ammermann Components recently paid a dividend of $1 per share. This dividend is expected to grow at a rate of 25 percent a year for the next five years, after which it is expected to grow at a rate of 7 percent a year. The required rate of return for this stock is 18 percent. What is the estimated price of the stock?

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...