Final answer:
The value of the stock, calculated using the Gordon Growth Model with the given dividend of $4.80, growth rate of 3.73%, and required rate of return of 12.93%, is $52.17.
Step-by-step explanation:
The question is asking to determine the value of the stock based on the Gordon Growth Model, which is a common method used in finance to value a stock that pays dividends that are expected to grow at a constant rate in perpetuity. Given the expected dividend next year ($4.80), the growth rate of the dividend (3.73%), and the required rate of return (12.93%), the value of the stock can be calculated using the formula:
Value of Stock = Dividend per share / (Required rate of return - Growth rate)
Plugging the given numbers into this formula, we get:
Value of Stock = $4.80 / (0.1293 - 0.0373) = $4.80 / 0.092 = $52.17
Therefore, the value of the stock is $52.17.