Answer: $28.91
Step-by-step explanation:
Price of stock = Sum of present value of dividends
Year Dividend Present Value
1 5 * 1.02 = $5.10 5.10/ (1 + 10%) = $4.64
2 5.1 * 1.02 = $5.20 5.20/ 1.1² = $4.30
3 5.20 * 1.02 = $5.30 5.30 / 1.1³ = $3.98
4 5.30 * 1.02 = $5.41 5.41 /1.1⁴ = $3.70
5 5.41 * 1.02 = $5.52 5.52/1.1⁵ = $3.43
6 5.52 * 1.02 = $5.63 5.63/1.1⁶ = $3.18
7 5.63 *1.02 = $5.74 5.74/1.1⁷ = $2.94
8 5.74 * 1.02 = $5.85 5.85/1.1⁸ = $2.73
Total $28.91