Problem:
Micro Corp. just paid dividends of $2 per share. Assume that over the next three years dividends will grow as follows, 5% next year, 15% in year two, and 25% in year 3. After that growth is expected to level off to a constant growth rate of 10% per year. The required rate of return is 15%.
Required:
Question: Calculate the intrinsic value using the multistage model.
Note: Please show how you came up with the solution.