A food company has developed a new low-calorie ice cream which they expect to be very popular. It is expected that their
Posted: Wed Mar 30, 2022 3:44 pm
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.
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.