The Directors of MJ Inc

Essay

The directors of MJ Inc.expect to pay a dividend of $2.00 (annual)a year from today.It is estimated that during the next four years ,the dividend will grow at an annual rate of 16 percent (i.e.g₁ = 16 percent).After that,the growth rate (g₂)will be equal to 12 percent per year and continue at that rate indefinitely.Calculate the present value of the MJ's stock if the required rate of return is 15 percent.