Triton Inc., is expected to grow at a rate of 22 percent for the next five years

Question:

Triton Inc., is expected to grow at a rate of 22 percent for the next five years and then settle to a constant growth rate of 6 percent. The company recently paid a dividend of $2.35. The required rate of return is 15 percent.

a. Find the present value of the dividends during the rapid-growth period if dividends grow at the same rate as the company.

b. What is the value of the stock at the end of year 5?

c. What is the value of the stock today?

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...