Your firm expects EPS equal to $4.00 at the end of the year and expects to grow at 35% for two years after that, before slowing to a constant growth rate of 8%. If it maintains a payout ratio of 40% and the cost of equity capital is 14%, what does your firm believe should be the fair value of its stock?

Answer rating: 100% (QA)

To calculate the fair value of the stock we can use the dividend discount model DDM which is given a... View the full answer