Answer:
The current price is $55.65 as computed below.
Step-by-step explanation:
The current price of the stock can be computed using the below formula:
Price=dividend/(rate of return-growth rate)
price=$3.20/(0.12-0.0625)
Price=$55.65
The stock of Jerome can be priced at $55.65 based on the fact that it offers return of 12% and the return is expected to grow at 6.25% in perpetuity.
This return shows that the actual return on shares is dividend dividend yield as well as gains yield.Dividend is the return on the share based on dividends receivable from the share, while gains yield stem from share price appreciation