Solving for the present value of a stock with 2-Part DDM
Onitsuka Tiger (オニツカタイガー) is expecting a period of intense growth, so it has decided to retain more of its earnings to help finance that growth. As a result, it is going to reduce its annual dividend by 10% a year for the next three years. After that, it will maintain a constant dividend of $0.75 a share. The company just paid a dividend of $1.80 per share. What is the market value of this stock if the required rate of return is 13%?