Final answer:
The stock price can be calculated using the present value of a stream of dividends formula.
Step-by-step explanation:
To calculate the stock price, we can use the formula for the present value of a stream of dividends. The formula is:
Stock Price = D1 / (1 + r) + D2 / (1 + r)^2 + D3 / (1 + r)^3 + ... + Dn / (1 + r)^n
Where D1, D2, D3, ... Dn are the dividends for each year, r is the required rate of return, and n is the number of years.
In this case, the dividends are $3.80, $7.90, $10.75, and $12.50 for the next four years, respectively. The required rate of return is 10.5%.
Using the formula, we can calculate:
Stock Price = $3.80 / (1 + 0.105) + $7.90 / (1 + 0.105)^2 + $10.75 / (1 + 0.105)^3 + $12.50 / (1 + 0.105)^4 = $10.80 + $13.19 + $14.44 + $15.18 = $53.61
Therefore, the stock price is $53.61