Reference no: EM132478233

Assume it is 7 years later and the Investor who purchased the stock 7 years ago, price of which you calculated in Assignment 1, is ready to sell the stock now.

What would be the price he can sell it for, assuming the grown rate of dividends has remained at 10.72% forever and the required rate of return has remained at 14%?

Show your work and provide a brief explanation of what you have done/steps you have taken and why.

Stock price = 42.20 = 1.38/ (14%-10.72%)

Expected dividend = 1.38

Required return = 14%

Growth rate = 10.72%