• American Express is a stock in the Dow Jones Industrial Average that trades on the New York Stock Exchange under the ticker symbol AXP. At midyear 1997, AXP's previous 5-year growth rate was 19.6 percent and analysts were forecasting a 13.2 percent long-term growth rate. Suppose AXP grows at a 19.6 percent rate for another 5 years, and thereafter grows at a 13.2 percent rate. What value would we place on AXP by assuming a 14.5 percent discount rate? AXP's 1997 dividend was $0.92.

  
  

Answer rating: 100% (QA)

To calculate the value of American Express AXP under the given conditions we c... View the full answer