Runyon Industries is expected to enjoy a very rapid growth rate in dividends of 30 percent a

Question:

Runyon Industries is expected to enjoy a very rapid growth rate in dividends of 30 percent a year for the next 3 years. This growth rate is then expected to slow to 20 percent a year for the next 5 years. After that time, the growth rate is expected to be 6 percent a year. D₀ is $2. The beta for this stock is 1.5. The expected return on the market is 11 percent, and the risk-free rate is 5 percent. The required rate of return is 20 percent. What is the estimated price of the stock?

Expected Return
The expected return is the profit or loss an investor anticipates on an investment that has known or anticipated rates of return (RoR). It is calculated by multiplying potential outcomes by the chances of them occurring and then totaling these...