What would be a fair price for this stock today

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Reference no: EM131045022

A company just paid a dividend of $1.30 per share. The consensus forecast of financial analysts is a dividend of $1.80 per share next year and $2.50 per share two years from now. Thereafter, you expect the dividend to grow 6% per year indefinitely into the future. If the required rate of return is 12% per year, what would be a fair price for this stock today? The correct answer is $38.81. Please show step by step how I can come to this answer.

Reference no: EM131045022

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