The Club Auto Parts Company has just recently been organized. It is expected to experience no growth for the next 2 years as it identifies its market and acquires its inventory. However, Club will grow at an annual rate of 5% in the third year and, beginning with the fourth year, should attain a 10% growth rate that it will sustain thereafter. The first divident to be paid at the end of the first year is expected to be $0.50 per share. Investors require a 15% rate of return on Club’s stock. What is the current equilibrium stock price?
The Club Auto Parts Company has just recently been organized.
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