Marcel Co is growing quickly. Dividends are expected to grow at a 30 percent rate for the next three years, with the growth rate falling off to a constant 6 percent thereafter. If the required return is 13 percent and the company just paid a $1.80 dividend, the current share price is $ . (Do not include the dollar sign ($). Round your answer to 2 decimal places.

125.74

To calculate the current share price, we can use the dividend discount model (DDM). The DDM calculates the present value of all future dividends to determine the current share price.

First, let's calculate the dividends for the next three years using the 30% growth rate:

Year 1 dividend = $1.80 * (1 + 0.30) = $2.34
Year 2 dividend = $2.34 * (1 + 0.30) = $3.04
Year 3 dividend = $3.04 * (1 + 0.30) = $3.95

To find the value of these dividends at the required return of 13%, we need to discount them. The present value of a dividend in Year 1 is calculated as:

PV1 = Dividend1 / (1 + Required Return) ^ (1)

PV2 = Dividend2 / (1 + Required Return) ^ (2)

PV3 = Dividend3 / (1 + Required Return) ^ (3)

Now let's calculate the present values of the dividends:

PV1 = $2.34 / (1 + 0.13) ^ 1 = $2.06
PV2 = $3.04 / (1 + 0.13) ^ 2 = $2.44
PV3 = $3.95 / (1 + 0.13) ^ 3 = $2.91

Next, let's calculate the present value of all future dividends after year 3. This is calculated using the constant growth rate of 6%:

PV4 = Year 4 dividend / (Required Return - Constant Growth Rate)

PV4 = $3.95 * (1 + 0.06) / (0.13 - 0.06) = $74.75

Finally, to calculate the current share price, we sum up the present values of all dividends:

Current Share Price = PV1 + PV2 + PV3 + PV4
Current Share Price = $2.06 + $2.44 + $2.91 + $74.75 = $82.16

Therefore, the current share price of Marcel Co is $82.16.

To calculate the current share price of Marcel Co, we can use the dividend discount model (DDM) formula:

Current Share Price = Dividend / (Required Return - Dividend Growth Rate)

First, we need to calculate the future dividends for the next three years using the given growth rate:

Year 1 Dividend = $1.80 * (1 + 0.30) = $2.34
Year 2 Dividend = $2.34 * (1 + 0.30) = $3.04
Year 3 Dividend = $3.04 * (1 + 0.30) = $3.95

Now, let's calculate the present value of these future dividends:

PV of Year 1 Dividend = $2.34 / (1 + 0.13) = $2.07
PV of Year 2 Dividend = $3.04 / (1 + 0.13)^2 = $2.35
PV of Year 3 Dividend = $3.95 / (1 + 0.13)^3 = $2.61

Next, we calculate the present value of the perpetuity after the third year using the constant growth rate:

PV of Perpetuity = Year 3 Dividend * (1 + Dividend Growth Rate) / (Required Return - Dividend Growth Rate)
= $3.95 * (1 + 0.06) / (0.13 - 0.06)
= $58.20

Lastly, we sum up the present values of the future dividends and the perpetuity to get the current share price:

Current Share Price = PV of Year 1 Dividend + PV of Year 2 Dividend + PV of Year 3 Dividend + PV of Perpetuity
= $2.07 + $2.35 + $2.61 + $58.20
= $65.23

Therefore, the current share price of Marcel Co is $65.23.