Probably Company's last dividend was $4. The dividend growth rate is expected to be constant at lx % for 3 years, after which dividends are expected to grow at a rate of x % forever. If the firm's required return (rs) is 12%, what is its current stock price?

Ans.
Dividend that the company will pay at year 1 = 4*(1+12%) =  $4.48
Dividend that the company will pay at year 2 = 4.48*(1+12%) = $5.01
Dividend that the company will pay at year 3 = 5.01*(1+12%) = $5.61

Dividend after the year 3 would be = [Dividend at year 3*(1+ growth rate)]/(Required rate of return - growth rate)
= [5.61*(1+2%)]/(12%-2%) = $57.22

Now, the value of the stock = PV of the all the future dividends of the company
= 4.48/(1+12%)^1 + 5.01/(1+12%)^2 + 5.61/(1+12%)^3 + 57.22/(1+12%)^3
= 4 + 3.99 + 3.99 + 40.75 = $52.73

Therefore, the current price of the stock is $52.73