At the end of the year 2020 Brown Bear Corporation paid dividends $2.09 per share. The company projects the following annual growth rates in dividends:

Year    Growth Rate

2021.        12%

2022.        12%

2023          12%

2024           9%

2025           6%

2026           6%

From year 2027 onward growth in dividends is expected to remain constant at 3% per year. The required rate of return for this stock is 10.94%. Calculate the economic value of the stock now (end of the Year 2020).

Answer rating: 100% (QA)

To calculate the economic value of the stock now end of the Year 2020 we can use the dividend discou... View the full answer