Tesla is expected d to pay no dividends over the next 4 years pay a dividend...
Tesla is expected d to pay no dividends over the next 4 years pay a dividend of $5 at the end of year 5, and then grow the dividends by 6% each year afterwards. the required rate of return is 8% what should be the stock price today according to the two stage growth model?
Homework Answers
Using Constant Growth Model,
Stock Price at the end of Year 4 = 5/(0.08 - 0.06)
Stock Price at the end of Year 4 = $250.00
Stock Price today = 250/(1.08)4
Stock Price today = $183.76
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