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Sagot :
Answer:
PV= $84.56
Explanation:
Giving the following information:
A stock will pay no dividends for the next 5 years. Then it will pay a dividend of $9.51 growing at 1.75%. The discount rate is 9.14%.
First, we need to calculate the value of the stock in five years:
PV5 = D1 / (i - g)
PV5= (9.51*1.0175) / (0.0914 - 0.0175)
PV5=$130.94
Now, the value today of the stock:
PV= FV / (1 + i)^n
PV= 130.94 / (1.0914^5)
PV= $84.56
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