A stock that currently does not pay a dividend is expected to pay its first div of $1.00 in fiver years. Thereafter, the div is expected to grow at an annual rate of 25% for the next three and then grow at a constant 5 per year thereafter. The required rate of return is 10.3%. What is the value of the stock today? a. $20.65 b. $20.95 c. $22.72 d. $23.87 ans = A
all i can say is, draw out a timeline… figure out all the cashflows… then discount them back to time zero