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What is a fair price for stock in exactly four years

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A share of stock has a dividend that is expected to grow at a constant perpetual rate. During the next year (t=0 to t=1), the dividend yield is expected to be 2.23%. The capital gains yield for the next year is expected to be -7.95%. Dividends are paid at year's end.

Problem 1: If the dividend paid at the end of the year (at t=1) is expected to be $6.04, what is a fair price for the stock in exactly 4 years from today?

Reference no: EM133002120

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