Non-Constant growth stock Valuation Stewart Industries just paid a $3.00 per share dividend on its common stock yesterday (i.e., D0 = $3.00).
The dividend is expected to grow 20 percent a year for the next four years, after which time the dividend is expected to grow at a constant rate of 5 percent a year for ever. You assume a 14 percent discount rate.
a. What is the price of the stock at the end of year 4
b. What should be the stock price today