EXAMPLE: Multistage growth
Consider a stock with dividends that are expected to grow at 15%per year fortwo years, after which they are expected to grow at 5% per year, indefinitely. The last dividend paid was $1. 00, and k.=11%. Calculate the value of this stock using the multistage growth model
Answer:
Calculate the dividends over the high-growth period
D1=Do(1+g*)=1.00(1.15)=$1.15
D2=D(1+g)=1.15(1.15)=1.15∧2=$1.32
Although we increase D, by the high growth rate of 15% to get D2， D2will grow at the constant growth rate of 5% for the foreseeable future. This property of Dallows us to use the constant growth model formula with D2, to get P1， a time= I value for all the (infinite)dividends expected from time=2 onward
P2＝D2/(k-g)＝1.32/(0.11-0.05)＝22，
Finally, we can sum the present values of dividend I and of P1, to get the present value of all the expected future dividends during both the high-and constant growth periods:
（1.15+22.00）／1.11=$20.86
我跟答案的区别在于，我认为d2应该是后面constant growth的d0，而书中写的是当做了d1，不太理解
