A food company has developed a new low-calorie ice cream which
they expect to be very popular. It is expected that their dividends
will grow by 20% per year over the next three years, then fall to a
steady rate of 5% per year after the market share of this ice cream
increases by a sufficient amount. Assume that the required rate of
return for this company is 14%. Also, the firm’s most recent (Year
0) dividend was $2 per share. Using some variation of the DDM, find
the current price of the firm’s stock.
A food company has developed a new low-calorie ice cream which they expect to be very popular. It is expected that their
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