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!作者: therecruit 时间: 2011-10-7 21:42
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!作者: cjs238 时间: 2011-10-7 21:44
In order for DDM to work you need r > g
since g = 25% and r = 20% the model becomes useless
