Louis Incorporated expects non-normal dividend growth over the next three years; that is a 10% growth rate in the first year,then 20%,and then 25% followed by growth of 5% thereafter.If the last dividend paid was $0.25 and the appropriate discount rate is 12%; what is the price of the stock today?

Question

Quizplus · Accepted Answer

D₁= 0.28 D₂= 0.33 D₃= 0.41 D₄= 0.43 P₃= D₄/(r-g) P₃= 6.19 PVD₁= 0.22 PVD₂= 0.26 PVD₃= 0.29 PVP₃= 4.40 P₀= 5.18

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