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4pass Inc. just paid an annual dividend of $1.12. The company follows a dividend policy that raises dividends annually at a rate of 4% (and expects this rate to go forever). The required rate of return is 13%. What is today's stock price?

Sagot :

Answer:

the stock price today is $12.94

Explanation:

The computation of the stock price today is as follows;

Current price = Dividend at year 1  ÷ (Required return - Growth rate)

 = ($1.12 × 1.04) ÷ (0.13 - 0.04)

= $12.94

hence, the stock price today is $12.94

It could be computed by applying the given formula so that the correct price could come

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