A young company doesn't pay dividends yet. Analysts expect it will pay its first dividend of...
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A young company doesn't pay dividends yet. Analysts expect it will pay its first dividend of $1.75 per share two years from now (D2 = $1.75), and its dividends will grow by 20% per year for the following two years. Afterward, dividends are expected to grow at a long-run rate of 3% per year. If investors require a 10% return on the stock, what's a fair price? A young company doesn't pay dividends yet. Analysts expect it will pay its first dividend of $1.75 per share two years from now (D2 = $1.75), and its dividends will grow by 20% per year for the following two years. Afterward, dividends are expected to grow at a long-run rate of 3% per year. If investors require a 10% return on the stock, what's a fair price?
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