Brew Co
Subject:FinancePrice: Bought3
Brew Co. just paid a $2.75 dividend. Dividends are expected to grow at the constant rate of 12% per year and the required return for stocks with similar risk to Brew Co. is 20%.(Round your final answers to the nearest cent.)
PART A: Calculate the current stock price for Brew Co.
PART B: How much does the expected future growth in the dividend contribute to the calculated stock price when compared to a dividend that is not expected to grow?
PART C: After consulting with management, you determine that the expected growth rate of 12% is only expected to last for two years. After that, the dividend is expected to grow at the long term industry growth rate of 4%. If your required rate of return remains 20%, calculate the current stock price.
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