I need help with this problem: Any explanation can be helpful
Find the price for a stock given that the required return is 16.7%, the current dividend is $1.01 per share, dividends are expected to grow at a rate of 18% during year 1, dividends are expected to grow at a rate of 19% during year 2, and dividends are expected to grow at a rate of 6% per year from that point on.
OK so I dont know how to do the top one but I can do one like this (below this sentence) easily because the first three years are constant:
The current dividend on a stock is $2 per share and investors require a rate of return of 12%. Dividends are expected to grow at a rate of 20% per year over the next three years and then at a rate of 5% per year from that point on. Find the price of the stock.
So can someone help explain to me how different it is to calculate the top one?
Thanks