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Baxter Corporation is expanding rapidly and currently needs to retain all of its earnings; hence,...

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Baxter Corporation is expanding rapidly and currently needs to retain all of its earnings; hence, it does not pay dividends. However, investors expect Baxter to begin paying dividends, beginning with a dividend of $1.75 coming 3 years from today. The dividend should grow rapidly-at a rate of 18% per year-during Years 4 and 5; but after Year 5, growth should be a constant 4% per year. If the required return on Baxter is 17%, what is the value of the stock today? D

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