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Air Technologies was founded 10 years ago. It has been profitable for the last 5 years, but it has needed all of its earnings to support growth and thus has never paid a dividend. Management has indicatedthat it plans to pay a $0.20 dividend 3 years from today, then toincrease it at a relatively rapid rate for 2 years, and then toincrease it at a constant rate of 7.50% thereafter. Management's forecast of the future dividend stream, along with the forecasted growth rates, is shown below. Assuming a required return of 10.25%,what is your estimate of the stock's current value?

YEAR                      0              1              2              3              4                              5                              6

GROWTH RATE  NA          NA          NA          NA          45.00%                  35.00%                  7.50%

DIVIDENDS         $ 0         $ 0         $ 0.200                                                 


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