An analyst is attempting to value shares of the XYZ Company. The company has just paid a dividend of $0.58 per share. Dividends are expected to grow by 15% next year and 10% year after that. From the third year onward, dividends are expected to grow at 5.6% per year for the foreseeable future. If the required rate of return is 8.3%, what would be the intrinsic value of the stock is closest to ?
Please do give some explanation of your answer as I’m trying to understand this concept.