Winters Hi-Hook Inc., a golf club manufacturer, is currently paying dividends of $.50 per share. These dividends are expected to grow at a 20 percent rate for the next two years and at a three ...
... percent rate thereafter (forever!). What is the value of the stock if the appropriate discount rate is 14 percent?
$6.26 is the value of the stock if the appropriate discount rate is 14 percent.
D1 = D0 (1 + g) = $0.50 (1.20) = $0.60
D2 = D1 (1 + g) = $0.60 (1.20) = $0.72
D3 = D2 (1 + g) = $0.72 ...
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