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Financial management: Calculate expected stock price, seven years from now.

A stock currently sells for $28 a share. Its dividend is growing at a constant rate, and its dividend yield is 5 percent. The required rate of return on the company's stock is expected to remain constant at 13 percent. What is the expected stock price, seven years from now?

$24.62
$29.99
$39.40
$41.83
$47.98

Solution Summary

With careful calculations and explanations, the solution arrives at an answer.

$2.19