The most recent annual dividend payment of Warren Industries, a rapidly growing boat manufacturer, was $1.50 per share. The firm’s financial manager expects that these dividends will increase by 10% over the next three years. At the end of three years, the firm’s mature product line is expected to result in a slowing of the dividend growth rate to 5% per year for the foreseeable future. The firm’s required return is 15%. What should be the price of the stock?

Answer rating: 100% (QA)

The price of the stock can be calculated using the dividend growth ... View the full answer