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xodiana
Jul 2, 2008, 09:01 PM
Miller Juice is a young company that currently does not pay a dividend. The company retains all their earnings to finance their growth. However, ten years from now the company is expected to start paying a $1.50 dividend. According to research reports the dividend should then grow by 5% annually forever.
If the required return on the stock investment is 13%, what should be Miller's stock price today?

I understand the formulas to calculate stock price, but since it said they currently did not pay a dividend then I did not know how to get started. If you could help me on which formula to use then I can figure out the rest on my own.