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Wildhorse, Inc., is a fast-growth company that is expected to grow at a rate of 23...

Wildhorse, Inc., is a fast-growth company that is expected to grow at a rate of 23 percent (per year) for the next four years. It is then expected to grow at a constant rate of 6 percent. Wildhorse’s first dividend, of $3.60, will be paid in year 3. If the required rate of return is 18 percent, what is the current value of the stock if dividends are expected to grow at the same rate as the company? (Round all intermediate calculations and final answer to 2 decimal places, e.g. 15.20.)

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Answer #1

Year Cash flows $0.00 $0.00 $3.60 pv @ 18% 0.8475 0.7182 0.6086 0.5158 0.4371 0.3704 0.3704 $4.43 $5.45 $6.70 $59.18 Present

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