XYZ common stock recently paid annual dividend in the amount of $1.75 per share. The analysts estimate of the firm's growth forecast over the next 6 years is 15%. You expect the firm to slow down in the long run and estimate the long-term growth rate after 6 years to be 8%.

If the required rate of return on the stock is 10%, what is your estimate of the stock price?

Answer rating: 100% (QA)

To calculate the estimated stock price we can use the Gordon Growth Model which take... View the full answer