Suppose Could I Industries expects to grow erratically over the next 4 years. It omitted its dividend this year (year 0). It plans to pay a $0.50 dividend in year 1, and then pay dividends of 1.00, 2.25 and 4.00 in years 2, 3 and 4, respectively. Beginning in year 5 it expects its dividends to grow 3.0 percent per year into perpetuity. Because of this erratic growth, investors are demanding a return of 15%. What is the value of the stock today?

Answer rating: 100% (QA)

The value of Could I Industries stock today can be determined using the discounted cash flow DCF val... View the full answer