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Calculate what the stock should sell for 5 years from now

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The Matador Restoration Co. is facing continually decreasing revenues due to the ever-shrinking population of people who want to restore vintage AMC Matadors. Based on the most recent earnings forecasts, management anticipates that dividends will decline at a rate of 11% perpetually. The firm just paid a dividend of $7.50 and the required return on the stock is 17%.

(a) At what price should the stock sell today?

(b) Calculate what the stock should sell for 5 years from now.

Reference no: EM132828140

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