Arizona State University FIN FIN 40628 A share of stock has a dividend that is expected to grow at a…
A share of stock has a dividend that is expected to grow at a constant perpetual rate.
During the next year (t=0 to t=1), the dividend yield is expected to be 4.3%.
The capital gains yield for the next year is expected to be 2.17%.
Dividends are paid at the year’s end.
If the dividend paid at the end of the year (at t=1) is expected to be $7.07, what is a fair price for the stock in exactly 6 years from today?
(Answer to the nearest $0.01)
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