# BrainMass Expert's Approach to: Stock valuation

A stock is expected to pay a dividend of $0.50 at the end of the year (that is, D1 = 0.50), and it should continue to grow at a constant rate of 7 percent a year. If its required return is 12 percent, what is the stock's expected price 4 years from today?

A stock is expected to pay a dividend of $1 at the end of the year. The required rate of return is rs = 11%, and the expected constant growth rate is 5%. What is the current stock price?

$16.67

$18.83

$20.00

$21.67

$23.33

6.

A stock just paid a dividend of $1. The required rate of return is rs = 11%, and the constant growth rate is 5%. What is the current stock price?

$15.00

$17.50

$20.00

$22.50

$25.00

#### Solution Summary

The solution explains how to calculate the current price of a stock.