If the expected dividend today is $2, and it is expected to grow 6% per annum thereafter

If the expected dividend today is $2, and it is expected to grow 6% per annum thereafter, what is the price of the stock if the appropriate discount rate is 15%?

Expert Solution

Price of stock = D1 / (r - g)

Price of stock = $2 / (0.15 - 0.06)

Price of stock = $22.22

jeff jeffy answered 2 years ago

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