Answer:
14.05
Step-by-step explanation:
We have the following:
Current Dividend = D0 = $ 1.40
g = growth rate = 2%
r = discount rate = 13%
Dividend in Year 5
= D5 = D0 * (1 + g) ^ 5
= $ 1.40 * (1 + 2%) ^ 5
= $ 1.40 * (1.02) ^ 5
Firm Stock Price at the end of year 4 = Dividend in Year 5 / (r - g)
= $ 1.40 * (1.02) ^ 5 / (13% -2%)
= $ 1.40 * (1.02) ^ 5 / (0.13 - 0.02)
Therefore, firm stock at the end of year 4 is
P4 = $ 1.40 * (1.02) ^ 5 / (0.13 - 0.02) = 14.05
<span>-18 + -15g + 24g2 + 20g3 = 0</span>
It’s 12 because 45 45 90 triangle
