Answer:
$73.51
Step-by-step explanation:
We can calculate the price of a stock after 2 years we are willing to pay by calculating the present value of cash flows each year by multiplying the cash flow with the present value factor according to the relevant year.
Year Nature Cash flow Pv factor (12%) PV of cash flow
1 Dividend $2 0.893 1.78
2 Dividend $3 0.797 2.391
2 Sale value $87 0.797 69.33
$73.51