Compute expected price of the stock

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Reference no: EM1363286

The dividend per share in one year is $2. In year two it is $4 a share. Then the dividend will grow at 5% per year after that. The expected rate of return is 12%.

a What is the current stock price?

b. What is the expected price of the stock in one year?

c. The expected return of 12% equals dividend yield plus capital appreciation

Please show formula and calculation in simple terms.

Reference no: EM1363286

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