Finance Assignment | Professional Writing
Computech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence, it does not pay dividends. However, investors expect Computech to begin paying dividends, beginning with a dividend of $0.75 coming 3 years from today.
The dividend should grow rapidly – at a rate of 38% per year – during Years 4 and 5, but after Year 5, growth should be a constant 7% per year. If the required return on Computech is 12%, what is the value of the stock today? Do not round intermediate calculations. Round your answer to the nearest cent.
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