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Posted by: Homeworkhelp
Price Quoted by Student: $3.5
Posted On: 2011-05-26 09:09:54

A stock currently sells for $28 a share. Its dividend is growing at a constant rate, and its dividend yield is 5 percent. The required rate of return on the company's stock is expected to remain constant at 13 percent. What is the expected stock price, seven years from now?

  a. $24.62      b. $29.99      c. $39.40      d. $41.83      e. $47.98   


SOLUTION   P0 = 28; dividend yield = 5%; D1
Price $3.5
Attachment 1: A stock currently sells for $28.doc
Solution Posted By: Homeworkhelp    Posted on: 26-05-2011