Richards Industries just paid an annual dividend of $1.50 and is expected to pay annual dividends of $1.65 and $2.805 per share the next two years, respectively. After that, the firm expects to maintain a constant dividend growth rate of 5 percent per year. What is the value of this stock today if the required return is 13 percent?

jjosep00, the required return is 13%. The last dividend paid was 1.50. Divide 1.5 by 13% and the value of the stock is $11.54 per share. Using the same method, the forcasted values for the next two years would be $12.69 and $21.58 respectively.