A company currently pays a dividend of $4 per share (D0= $4). Itis estimated that the company’s dividend will grow at a rate of 10%per year for the next 2 years, and then at a constant rate of 5%thereafter. The company’s stock has a beta of 1.6, the risk-freerate is 4% and the market risk premium is 2%. What is your estimateof the stock’s current price?
