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Computing the price of the stock

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The stock of Robotic Atlanta Inc. is trading at $ 33.00 per share. In the past, the firm has paid a constant dividend of $ 5.92 per share and it has just paid an annual dividend (i.e., D0 = 5.92 ). However, the company will announce today new investments that the market did not know about. It is expected that with these new investments, the dividends will grow at 2.5 % forever. Assuming that the discount rate remains the same, what will be the price of the stock after the announcement?

Reference no: EM133060445

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