Question

Better Mousetraps has come out with an improved product, and the world is beating a path to its door. As a result, the firm projects growth of 20% per year for 4 years. By then, other firms will have copycat technology, competition will drive down profit margins, and the sustainable growth rate will fall to 5%. The most recent annual dividend was DIV0 = $1 per share. What are the expected values of DIV1 DIV2 DIV3 and DIV4?

Answer 1

The answer and procedures of the exercise are attached in the following two images.

Explanation

Please consider the data provided by the exercise. If you have any question please write me back. All the exercises are solved in a two sheets with the formulas indications.