You are analyzing a stock. The stock's most recent dividend paid was $2.9 per share. You expect the stock dividends to grow at 20% for the next three years (until t = 3), followed by a long-term stable growth rate of 2.3% per year. The required rate of return on the stock is 7%. What is the intrinsic value of the stock?

Answer rating: 100% (QA)

To calculate the intrinsic value of the stock we can use the dividend discount model DDM The DDM values a stock by calculating the present value of it... View the full answer