Question

A firm does not pay a dividend. It is expected to pay its first dividend of $0.25 per share in 3 years (D3). This dividend will grow at 8 percent indefinitely. Using a 10 percent discount rate, compute the value of this stock

Answer 1

If this growth rate continues, what would be the stock price in four years if the P/E ratio remained unchanged? What would the price be if the P/E ratio increased