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

sharksfan

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

In order for DDM to work you need r > g

since g = 25% and r = 20% the model becomes useless

That company my friend is worth inifinity

therecruit

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!