Question

m is expected to pay a dividend of $2.45 next year and $2.60 the following year. Financial analysts believe the stock will be at their price target of $95 in two years. Compute the value of this stock with a required return of 12.4 percent.

Answer 1

$79.43

Step-by-step explanation:

Year Return Amount($) PV factor for 12.4% Present Value

1 Dividend 2.45 0.890 2.179715

2 Dividend 2.6 0.792 2.057978

2 Value of share 95 0.792 75.19535

at end of tr 2

TOTAL $79.43304

Thus, the present value of share is $79.43