Tel Tec has just announced that their next dividend will be $2.25. In the announcement, management has projected that earnings will grow at 10 percent per year for the following 3 years, then slow to 7 percent for the 2 years after that and then settle at 3 percent forever. If investors require a 10 percent rate of return, what will the shares sell for in the market today?

Answer rating: 100% (QA)

To calculate the share price we can use the dividend discount model which is based on the idea that ... View the full answer