Answer:
$38.956
Step-by-step explanation:
According to dividend valuation model, the value of stock today is the present value of all the dividends that it will receive in future.
Based on the above discussion, the value of stock shall be calculated as follows:
Present value of Year 1 dividend= $1.42
1.6065(1+13%)^-1
Present value of Year 2 dividend= $1.496
1.91(1+13%)^-2
Present value of Year 3 dividend= $1.57
2.27(1+13%)^-3
Present value of Year 4 dividend= $1.66
2.7013(1+13%)^-4
Present value of Year 5 dividend= $1.74
3.21(1+13%)^-5
Present value of dividend after Year 5=$31.07
(3.21(1+7%)/(13%-7%))*(1+13%)^-5
Price of share= $38.956