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!

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!

stockjaguar

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

hoangvu90

or yeh... g>r

cjs238

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