Please Help! Stock Valuation r*g growing, blank, required

busprof

Please, help solve this problem. I knew how to do it, but now just blank!

Dividends Year1: 1.00$ Year 2: 3.00$ Year 3: 2.00$ Year 4: 5.00$
then it starts growing steadily 25% a year non stop
r = required return rate is 20%
What is Po? price of the stock?

Thanks!

cjs238

You say r>g, but the growth rate is more than r.

hoangvu90

or yeh... g>r

stockjaguar

can't use dividend growth model if g is > r

noel

hi, kseniaru, it's nice to see you on AF, I remember you from the level1 2008 forum. Congrats on passing level1! dont know if you remember me, i'm from russia, live in bos. good luck on level 2!