Your company has just successfully completed some R&D work that leads you to expect that its earnings and dividends will grow at a rate of 20%, 10%, and 8% in next three years respectively, and settle down to a constant growth rate of 5% starting in the 4th year. The last dividend paid (D0) of your company was $2 and investors require a 20% return.

a) What is the current value per share of your company's stock?

b) What is the expected capital gain yield in year 1 and year 10 respectively?

Answer rating: 100% (QA)

To calculate the current value per share of the companys stock we will use the Dividend Discount Mod... View the full answer