Grow On, Inc. is a firm that is experiencing rapid growth. The firm yesterday paid a dividend

Question:

Grow On, Inc. is a firm that is experiencing rapid growth. The firm yesterday paid a dividend of $4.90. You believe that dividends will grow at a rate of 20% per year for three years, and then at a rate of 5% per year thereafter. You expect the stock will sell for $34.19 in three years. You expect an annual rate of return of 18% on this investment. If you plan to hold the stock indefinitely, what is the most you would pay for the stock now?

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...