The CFO ofParamax Corporation(PMX) has just informed you that PMX stock will continue to pay a dividend of $4.25 for the next 6 years. The current cost of equity ( re) for PMX is 8.75%. After that, the CFO expects reto drop to 7.50% and the dividend to increase by 2% per year. What is the value of PMX stock?

Answer rating: 100% (QA)

To calculate the value of PMX stock we can use the dividend discount model DDM to calculate the pres... View the full answer