Question: NEED AS SOON AS POSSIBLE SHOW ANSWERS USING FORMULA AND CALCULATIONS (NOT EXCEL) The Watts Company has just recently been restructured. It is expected to

NEED AS SOON AS POSSIBLE SHOW ANSWERS USING FORMULA AND CALCULATIONS

NEED AS SOON AS POSSIBLE

SHOW ANSWERS USING FORMULA AND CALCULATIONS (NOT EXCEL)

The Watts Company has just recently been restructured. It is expected to experience no growth for the next 2 years as it identifies business opportunities. However, Watts will grow at an annual rate of 5% in the third year and, beginning with fourth year, should attain a 10% growth rate which will sustain thereafter. The first dividend to be paid at the end of the first year is expected to be $0.50 per share. Shareholders required a 15% rate of return. Required: What is the current stock price of Watts? 3 marks

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