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Sagot :
Based on the dividend growth rate and the required return on Quinoa Farms stock over the years, the current share price is $34.93.
What is Quinoa farm's current stock price?
This is the sum of the present values of the dividends using the various required returns.
The dividends for the years are:
Year 1:
= 2.95 x ( 1 + 0.034)
= $3.0503
Year 2:
= 3.0503 x ( 1 + 0.034)
= $3.1540
Year 3:
= 3.154 x 1.034
= $3.2612
Year 4:
= 3.2612 x 1.034
= $3.3721
Year 5:
= 3.3721 x 1.034
= $3.4868
Year 6:
= 3.4868 x 1.034
= $3.6053
Year 7:
= 3.6053 x 1.034
= $3.7279
This allows us to calculate the terminal value at year 6:
= 3.7279 / (11% - 3.4%)
= $49.05
The current price is:
= 3.0503 / 1.15 + 3.1540 / 1.15² + 3.2612 / 1.15³ + 3.3721 / (1.15³ x 1.13) + 3.4868 / (1.15³ x 1.13²) + 3.6053 / (1.15³ x 1.13³) + 49.05 / (1.15³ x 1.13³)
= $34.93
Find out more on calculating share price at https://brainly.com/question/14421538.
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