Williamson Metals, Inc. paid a dividend last year of $3, and is expecting dividends to grow at an 18% rate in years 1 and 2 followed by constant growth of 6% per year thereafter. Similar stocks return 12%. Calculate the value of the stock today.
Select one:
a.
$93.76
b.
$73.85
c.
$65.37
d.
$82.91
Value of the stock of Willamson Metals
today=3*1.18/1.12+3*1.18^2/1.12^2+3*1.18^2*1.06/1.12^2*1/(12%-6%)=65.37
Williamson Metals, Inc. paid a dividend last year of $3, and is expecting dividends to grow...