Arthur’s toys paid a dividend of $3.00 recently. Company projections made by Arthur estimate the dividend will remain at that level for years 1 and 2. Following this, the dividend is supposed to grow at a 10% rate for years 3 and 4. Finally, the dividend is expected to grow at a 5% rate indefinitely. Cost of Equity is 12.5%
What is the fair market value of Arthur’s toys stock?