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Homework answers / question archive / You are now considering buying shares of common stock for a firm that is expected to have extraordinary divided growth of 25% per year for 3 years, after which it will face more competition and slip into a constant growth rate of 5% per year for many, many years to come

You are now considering buying shares of common stock for a firm that is expected to have extraordinary divided growth of 25% per year for 3 years, after which it will face more competition and slip into a constant growth rate of 5% per year for many, many years to come

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You are now considering buying shares of common stock for a firm that is expected to have extraordinary divided growth of 25% per year for 3 years, after which it will face more competition and slip into a constant growth rate of 5% per year for many, many years to come. The next year's dividend is expected to be $4 per share. Would you buy this stock at the current market price of $70? Assume that the discount rate is 13%.

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