A firm just paid a dividend of $1.00. Its dividends are expected to grow at 15% per year for two years, after which they are expected to grow indefinitely at 5% per year. The required rate of return is 11%. Draw the timeline indicating the dividend payments up to end of year 5. Calculate the current value of this stock.

Answer rating: 100% (QA)

Year 1 100 Year 2 115 Year 3 133 Year 4 ... View the full answer