Yamaha just had earnings per share of 2 at the end of last


Yamaha just had earnings per share of $2 at the end of last year and paid out an dividend of $0.3 per share. Analysts are predicting a 8% per year growth rate in earnings over the next three years followed by a growth rate of 6% for two years. After then, Yamaha’s earnings are expected to grow at a rate of 5% per year forever. Yahama’s cost of equity is 12% per year and its dividend payout ratio is 20% in the first five years and 80% after five years. What is the stock price today based on the dividend discount model?

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Financial Management: Yamaha just had earnings per share of 2 at the end of last
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