Calculate stock value from dividends

Firm X just paid an annual dividend of $1.50 and is expected to pay annual dividends of $1.65 and $2.805 per share the next two years, respectively. After that, the firm expects to maintain a constant dividend growth rate of 5 percent per year. What is the value of this stock today if the required return is 13 percent?

1. $29.56

2. $29.97

3. $30.29

4. $32.06

5. $32.49

Solution Summary

This solution is comprised of a detailed explanation to answer what is the value of this stock today if the required return is 13 percent.