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Dumbo Inc. just paid a dividend of $2.70. The company expects a super growth of 6%...

Dumbo Inc. just paid a dividend of $2.70. The company expects a super growth of 6% for the first 4 years and expect to grow at a constant rate of 3% after that. IF the current Ke is 6.5%, what is the expected price of this stock today?

Answer choices are:

100.31

104.52

67.59

88.65

92.69

Solutions

Expert Solution

The formulas and the inputs used is as follows:


The result is as follows:

So, the correct answer is option d "$88.65"

jeff jeffy answered 2 years ago
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