Question

asume Highline Company has paid an annual dividend of $1.06 Analysts are predicting an 11.7% per year growth rate in rings over the next five years. After then ginem ings are expected to grow at the current industry average of 48% per yow Highline's equity cost of capitalis 8.6% per year and is dividend payout to remains constant for what price does the dividend discount model predict Highline Mock should selt? The value of Highne's wackis (Round to the nearest cent)

Answer 1

We see that the value of the stock is given as equal to=1.06*(1.117/1.086)+1.06*(1.117/1.086)^2+1.06*(1.117/1.086)^3+1.06*(1.117/1.086)^4+1.06*(1.117/1.086)^5+1.06*(1.117/1.086)^5*1.048/(8.6%-4.8%)=39.42269519