Lifecycle motorcycle company is expected to pay a dividend in year 1 of $2, a dividend in year 2 of $3, and a dividend in year 3 of $4. after year 3, dividends are expected to grow at the rate of 7% per year. an appropriate required return for the stock is 12%. using the multistage ddm, the stock should be worth today.

$67.95

Explanation:

Dividends per year;

D1 =$2

D2 = $3

D3 = $4

D4 = D3(1+g)

g= growth rate = 7% or 0.07 as a decimal

D4 = 4*(1.07) = $4.28

Next, find PV of each dividend at 12% rate of return and sum them up;

Price= 2/ (1.12) + 3/(1.12^2) +4/ (1.12^3) +

=1.7857 + 2.3916 + 2.8471 + 60.9284

= 67.9528

Therefore, the stock should be worth $67.95 today

answer; /// the above statement is (true);

a

explanation:

reducti0n

\