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What should the value of the bank stock be

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Question - Suppose that stockbrokers have projected that Yorktown Savings will pay a dividend of $5 per share on its common stock at the end of the year; a dividend of $6.5 per share is expected for the next year, and $ 7 per share in the following three year. The risk-adjusted cost of capital for banks in Yorktown's risk class is 17 percent. If an investor holding Yorktown's stock plans to hold that stock for only five years and hopes to sell it at a price of $60 per share, what should the value of the bank's stock be in today's market?

Reference no: EM132962142

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