What should be the price of the given stock

Reference no: EM132043780

Question: Suppose a company just paid a yearly dividend of $4.00 per share on its common stock. Two years ago, the company paid 3.2 as yearly dividend. Assume required rate of return on similar equites to be 12% and riskfree rate of return to be 3%. Suppose dividend is going to grow at the rate of the previous two years for the next 2 years and then dividend growth rate is going to decline to 3% forever. What should be the price of this stock after we have already received current dividend of $4.00?

Reference no: EM132043780

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