Please clearly show step by step ( I believe there are 5 steps ) and equations....

Question

Question

Suppose a stock has just paid a $5 per share dividend. The dividend is projected to grow at 10% for the next two years, the 8

Please clearly show step by step ( I believe there are 5 steps ) and equations. Thank you!

Answer 1

Answer #1

Using DDM Model,

Stock Price = 5(1.10)/(1.12) + 5(1.10)²/(1.12)² + 5(1.10)²(1.08)/(1.12)³ + 5(1.10)²(1.08)(1.06)/(0.12 - 0.06)(1.12)³

Stock Price = $90.37

Answer 2

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