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A small business has decided to seek new investors for expansion. The company has recently paid a $4.75 dividend. The average required return for the industry is 17% Dividends have historically grown at a 6% interest rate. The new expansion of the company will increase dividend growth to 10% for the next 4 years. After that, the managers have decided the growth rate will recover to the industry standard. (6 points) What is the value of the companyâ€™s stock today? What would the value be if the growth rate grew to 8% in the new period? What would the value of the firm be if the super growth period was 6 years instead of 4 years? Solution A. V alue of the companyâ€™s stock today : $52.09 B. Value if the growth rate grew to 8% in the new period : $48.85 C. Value of the firm if the super growth period was 6 years instead of 4 years : $54.70 .

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- A small business has decided to seek new investors for expansion. The company has recently paid a $4.75 dividend. The average required return for the industry is 17% Dividends have historically grown at a 6% interest rate. The new expansion of the company will increase dividend growth to 10% for the next 4 years. After that, the managers have decided the growth rate will recover to the industry standard. (6 points) What is the value of the companyâ€™s stock today? What would the value be if the growth rate grew to 8% in the new period? What would the value of the firm be if the super growth period was 6 years instead of 4 years? Solution A. V alue of the companyâ€™s stock today : $52.09 B. Value if the growth rate grew to 8% in the new period : $48.85 C. Value of the firm if the super growth period was 6 years instead of 4 years : $54.70