Consider the stock of Davidson Company, which will pay an annual dividend of $2 one year from today. The dividend will grow at a constant annual rate of 5 percent, forever. The market requires a 12 percent return on the company's stock.
a. What is the current price of a share of the stock?
b. What will the stock price be 10 years from today?
What is the current price of a share of the stock?
ke=cost of ...
This provides the steps to compute the current price of a share