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nonconstant growth storico co. just paid a dividend of $3.65 per share. the company will increase its dividend by 20 percent year and will then reduce its dividend growth rate by 5 percentage points per year until it reaches the industry average of 5 percent dividend growth, after which the company will keep a constant growth rate forever. if the required return on the company's stock percent, what will a share of stock sell for today?

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If the company continues to grow at its current rate indefinitely, a share of stock will be sold for 71.03 today. if the required percentage return on the company's stock.

A security that denotes ownership of a portion of the issuing company is share referred to as a stock, also known as equity. Shares, which are units of stock, entitle their owners to a portion of the company's assets and profits based on how many shares they own.

The cornerstone of many individual investors' portfolios, stocks are primarily bought and sold on stock exchanges. Government rules aimed share at shielding investors from dishonest practices must be followed when trading stocks.

D0 = 3.65

D1 = 3.65( 1+ 0.20) = 4.38

D2 = 4.38( 1+ 0.15) = 5.037

D3 = 5.037( 1+ 0.10) = 5.5407

Value of Stock = D D2 + (1+r)2 D3(1+G) D3 r-G + (1+r)3 (1+r)3 (1+r)

where r = 0.12

G = 0.05

= 4.38 / (1 +0.12)  + 5.037 / (1 +0.12)2 + 5.5407 / (1 + 0.12)3 + 5.5407(1+0.05) / 0.12-0.05 / (1 + 0.12) 3

= 71.03

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