Nu-Tech stock's last annual dividend was $1.10 a share.Dividends are expected to increase by 25 percent for the next two years and then increase at a constant 4 percent annually.The required return on this high-risk stock is 18.5 percent.What is the current value of one share?

Question

Quizplus · Accepted Answer

P₂ = ($1.10 × 1.25² × 1.04)/(.185 - .04)= $12.33P₀ = ($1.10 × 1.25)/1.185 + [($1.10 × 1.25²)+ $12.33]/1.185² = $11.16

Nu-Tech Stock's Last Annual Dividend Was $1