Answer:
a. $35.29
b. $78.26
Step-by-step explanation:
Question b. Current stock price if return is 11%
a. Current stock Price (P0) = Next year dividend / (Ke - Growth)
If return is = 18%
Current stock Price = 4.5 / (0.18 - 0.0525 = $35.29
b. Current stock Price (P0) = Next year dividend / (Ke - Growth)
If return is = 11%
Current stock Price = 4.5 / (0.11 - 0.0525) = $78.26