The Bada Bing Corporation paid its first dividend yesterday of $3/share. The Bing is expected to be
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Question:
The Bada Bing Corporation paid its first dividend yesterday of $3/share. The Bing
is expected to be able to grow dividends at 9% for the next two years, then grow dividends at5% for the two years after that, and then settle into a steady state where they will growdividends at 3% per year forever. If the required return on Bada Bing stock is 15% (the risk isa little high in their business), what is the value of one share of Bada Bing stock?
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