Company is growing quickly. Dividends are expected to grow at 20 percent per year during the next three years, 10 percent over the following year, and then 6 percent per year thereafter. The required rate of return on this stock is 12 percent. The company recently paid a dividend of $1.75.
a) Calculate the present value of each dividend for years 1-4.
b) Calculate the stock price as of the end of year 4.
c) Calculate the current stock price (P0).
d) Calculate the dividend yield (D1/P0).