Deployment Specialists pays a current (annual) dividend of $1 and is expected to

Question

Deployment Specialists pays a current (annual) dividend of $1 and is expected to grow at 22% for two years and then at 4% thereafter. If the required return for Deployment Specialists is 10.5%, what is the intrinsic value of Deployment Specialists stock? (Do not round intermediate calculations. Round your answer to 2 decimal places.) I know what the answer is and how to set up the equation but when i do it this way i end up with a number in the single much smaller than 21.83

=

$1 × 1.22/

+

$1 × 1.222/

+

$1 × 1.222 × 1.04/

1 + 0.105

(1 + 0.105)2

(0.105 0.04) × (1 + 0.105)2

                         = $21.83

=

$1 × 1.22/

+

$1 × 1.222/

+

$1 × 1.222 × 1.04/

1 + 0.105

(1 + 0.105)2

(0.105 0.04) × (1 + 0.105)2

Explanation / Answer

price = (1*1.22^1)/1.105^1+(1*1.22^2)/1.105^2+((1*1.22^2*1.04)/(0.105-0.04))/1.105^2=21.83

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