Daa's stock is selling for $15 per share. the firm's income, assets, and stock price have been growing at an annual 15 percent rate and are expected to continue to grow at this rate for 3 more years. no dividends have been declared as yet, but the firm intends to declare a dividend of d3 = $2.00 at the end of the last year of its supernormal growth. after that, dividends are expected to grow at the firm's normal growth rate of 6 percent. will you buy this stock? why?

This question is incomplete since the required return is not pasted here. I checked on the web and found similar question with the firm's required rate of return is 18 percent. You can use this to solve the question as follows.

Explanation:

Use Dividend Discount Model (DDM) to find the intrinsic value of the stock.

Find the present value of dividends

D3 = 2

PV(of D3) = 2/(1.18^3) = 1.2173

D4 = D3(1+g) = 2(1+0.06) = 2.12

PV(of D4) =

PV (of D4) = 17.6667/ 1.6430 = 10.7527

Next, sum up the present values ;

= 1.2173 + 10.7527

= $11.97

Therefore, DAA's stock is currently overpriced ,so you should not buy it since it is only valued at $11.97 and not $15.

rational decision making is a multi-step process for making choices between alternatives. the process of rational decision making favors logic, objectivity, and analysis over subjectivity and insight. the word “rational” in this context does not mean sane or clear-headed as it does in the colloquial sense.

hope this

i guess you could put raise the economic balance