Roxy Incorporated expects non-normal dividend growth over the next three years; that is a 20% growth rate for three years followed by growth of 10% thereafter.If the last dividend paid was $3.00 and the appropriate discount rate is 16%; what is the price of the stock today?

Question

Quizplus · Accepted Answer

D₁= 3.60 D₂= 4.32 D₃= 5.18 D₄= 5.70 P₃= D₄/(r-g) P₃= 95.04 PVD₁= 2.68 PVD₂= 3.21 PVD₃= 3.32 PVP₃= 60.89 P₀= 70.10

Roxy Incorporated Expects Non-Normal Dividend Growth Over the Next Three