Answer:
$5.95
Explanation:
Given that,
Dividend paid in Year 7 = $2 per share
Growth rate of dividend = 2.2%
Required return = 16 percent
Share price is the present value of all future dividends.
Present Value of future dividends at year 6:
= 
= 
= 
= $14.49
Present value of dividends (Now):
= Present Value of future dividends at year 6 × (1 + Required return)^{-6}
= $14.49 × (1 + 0.16)^{-6}
= $5.95
Therefore, the current share price is $5.95 if the required return is 16 percent.