FIN 3200-The Quick-step corporations common stock is selling at $90.00 per share

| June 14, 2018

The Quick-step corporations common stock is selling at $90.00 per share.Its managers who firmly believe in the non-constant growth version of the dividend discount model, are convinced that it is incorrectly priced in the market.The last paid dividend per share was $2.50, and based on the firm’s market share and competitive strengths it is estimated that the dividend will grow at the rate of 20% for two more years, then grow at the rate of 14% for an additional year, before converging to the industry average growth rate of 9%.If the discount rate estimated for the firms stock is 15%, what do you think about the managers beliefs? Explain.

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