Bruin Inc. has recently announced a $7.9 EPS. Earnings are expected to grow at 5 percent per year forever. The company will not pay dividends on the stock over the next 6 years.

However, it will pay 30% of its earnings as dividend starting in year 7. The payout ratio will remain at 30% forever. Earnings will continue to grow at the same 5% rate.

If the required rate of return on this stock is 15 percent, what is the current share price according to the dividend growth model?

Answer rating: 100% (QA)

To find the current share price according to the dividend growth model we can use the Gordon Growth ... View the full answer