CHAPTER 8 STOCK VALUATION

the stock price, the dividend growth rates, and the required return, but not the dividend. First, we need to realize that the dividend in Year 3 is the current dividend times the FVIF. The dividend in Year 3 will be: D3 = D0 (1.30) 3 And the dividend in Year 4 will be the dividend in Year 3 times one plus the growth rate, or: D4 = D0 (1.30) 3 ... ................
................