• The fast-growing firm of GoodCoffee Inc. is planning its first issue of public stock. The firm will pay out its first dividend of $1 one year from today. Analysts expect annual dividends to grow at a rate of 12% per year for each of the following two years (year 2 and year 3). After that, the dividends will grow at a constant rate of 7% indefinitely. Investors require a 10% return from holding GoodCoffee stock.
•   What price should GoodCoffee Inc. set for its new stock?
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Answer rating: 100% (QA)

To calculate the price that Good Coffee Inc should set for its new stock we need to use the Dividend ... View the full answer