Question: Please answer the question below. Microtech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence, it does not pay dividends.
Microtech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence, it does not pay dividends. However, investors expect Microtech to begin paying dividends, beginning with a dividend of $2.90 coming 3 years from today. The dividend should grow rapidly-at a rate of 29% per year-during Years 4 and 5; but after Year 5, growth should be a constant 6.8% per year. If the required return on Microtech is 10.90%, what is the value of the stock today? $125.39 $82.42 $130.57 $101.36
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