Problem:
A company currently pays a dividend of $3 per share, D0 = 3. It is estimated that the company's dividend will grow at a rate of 17% percent per year for the next 2 years, then the dividend will grow at a constant rate of 6% thereafter. The company's stock has a beta equal to 0.9, the risk-free rate is 3 percent, and the market risk premium is 4 percent.
Required:
Question: What is your estimate is the stock's current price?
Note: Provide support for your underlying principle.