Consider a firm that is not currently paying dividends. At the end of 5 years it will pay a dividend of $2, which will grow at 3% forever. The risk-free rate is 5%, and the company has an equity Beta of 1.2. The market risk premium is 6%. Using the dividend discount model, what is the fair value for the stock of this company?

Answer rating: 100% (QA)

The fair value of a stock using the dividend discount model DDM can be calculated by dis... View the full answer