The last dividend paid by GM was $1.25. The dividend growth rate is expected to be constant at 15% for 3 years, after which dividends are expected to grow at a rate of 6% forever. If the firms required return (rs) is 11% in Years 1 and 2 and then increases to 13% thereafter and (rs) remains at 13% indefinitely. What is the stocks current price?
=1.25*(1.15/1.11)+1.25*(1.15/1.11)^2+1.25*(1.15/1.11)^2*(1.15/1.13)+1.25*(1.15/1.11)^2*(1.15/1.13)*1.06/(13%-6%)
=24.67919174
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