Assume that the average firm in your company's industry is expected to grow at a constant rate of 5 percent,and its dividend yield is 4 percent.Your company is about as risky as the average firm in the industry,but it has just developed a line of innovative new products which leads you to expect that its earnings and dividends will grow at a rate of 40 percent [ = D₀(1 + g)= D₀(1.40)] this year and 25 percent the following year,after which growth should match the 5 percent industry average rate.The last dividend paid (D₀)was $2.What is the value per share of your firm's stock? A) $42.60 B) $82.84 C) $91.88 D) $101.15 E) $110.37

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The Answer of Assume that the average firm in your company's industry is expected to grow at a constant rate of 5 percent,and its dividend yield is 4 percent.Your company is about as risky as the average firm in the industry,but it has just developed a line of innovative new products which leads you to expect that its earnings and dividends will grow at a rate of 40 percent [ = D₀(1 + g)= D₀(1.40)] this year and 25 percent the following year,after which growth should match the 5 percent industry average rate.The last dividend paid (D₀)was $2.What is the value per share of your firm's stock? A) $42.60 B) $82.84 C) $91.88 D) $101.15 E) $110.37

Assume That the Average Firm in Your Company's Industry Is