Consider the stock of SLB Inc., a growth stock that will pay no dividend the...
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Finance
Consider the stock of SLB Inc., a growth stock that will pay no dividend the next year. Starting in year two, the company will pay a dividend of $3 and will increase it by 10% for the next three years. Afterwards, dividends will grow by 7% per year indefinitely. The stock has a required rate of return of 17%. Please explain your solution (a number is not sufficient).
What is the value (price) of the stock today
What is the price of the stock at t=11, assuming the required rate of return (i.e., 17%) and the growth rate of dividends (i.e., 7%) do not change?
What is the price of the stock at t=2, assuming the required rate of return (i.e., 17%) and the growth rate of dividends (i.e., 7%) do not change?
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