You are considering the purchase of a common stock that paid a dividend of $2.00 yesterday.You expect this stock to have a growth rate of 15 percent for the next 3 years,resulting in dividends of D₁=$2.30,D₂=$2.645,and D₃=$3.04.The long-run normal growth rate after year 3 is expected to be 10 percent (that is,a constant growth rate after year 3 of 10% per year forever).If you require a 14 percent rate of return,how much should you be willing to pay for this stock?

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The Answer of You are considering the purchase of a common stock that paid a dividend of $2.00 yesterday.You expect this stock to have a growth rate of 15 percent for the next 3 years,resulting in dividends of D₁=$2.30,D₂=$2.645,and D₃=$3.04.The long-run normal growth rate after year 3 is expected to be 10 percent (that is,a constant growth rate after year 3 of 10% per year forever).If you require a 14 percent rate of return,how much should you be willing to pay for this stock?

You Are Considering the Purchase of a Common Stock That