Question:
The last dividend paid by Klein Company was $2.00 (that is Dο=$2.00). Klein's growth rate is expected to be a constant 5% for next three years, after which dividends are expected to grow at a rate of 10% forever. Klein's required rate of return on equity is 16%. What will be the price of Klein's common stock two years from today (i.e., right after you receive second dividend)?
Note: You need to count up to three decimal points.