6. Assume that the average firm in your company’s industry is expected to grow at a constant rate of 7 percent and its d

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6. Assume that the average firm in your company’s industry is
expected to grow at a constant rate of 7 percent and its dividend
yield is 8 percent. Your company is about as risky as the average
firm in the industry , but it has just successfully completed some
R&D work that leads you to expect that its earnings and
dividends will grow at a rate of 40 precent ¨( D1= D0(1+g)=
D0=(1.40). this year and 20 percent the following year, after which
growth should match the 7 percent industry average rate. The last
dividend paid (D0) was$1. What is the current value per share of
your firm’s stock?