Problem Walk-Through Computech Corporation is expanding rapidly and currently ne

Question

Problem Walk-Through Computech Corporation is expanding rapidly and currently needs to retain all of its coming 3 years from today. The dividend should grow rapdrat a rate of 30% year-dunng Years 4 and 5a bt after year s, gwith should be .contrhk perver rmerea truena.Camachaik atarathe value of the stock today? Do not round intermediate caloulations. Round your enswer to the nearest cent eamngs; herce, it does not pay dvidends. Howeve, mesters expect Comptech bo begn parre dvdends. Ieprnng adedend d ?1.00

Explanation / Answer

Value = 26.46

Discount rate 14.0000% Cash flows Year Discounted CF= cash flows/(1+rate)^year Cumulative cash flow                              -   0                                            -                                           -                                -   1                                            -                                           -                                -   2                                            -                                           -                         1.000 3                                        0.67                                    0.67                       1.300 4                                        0.77                                    1.44                       1.690 5                                        0.88                                    2.32                     46.475 5                                     24.14                                  26.46

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