Question

$35.50 per share is the current price for Foster Farms' stock. The dividend is projected to increase at a constant rate of 5.50% per year. The required rate of return on the stock, rs, is 9.00%. What is the stock's expected price 3 years from today?a. $37.86b. $38.83c. $39.83d. $40.85e. $41.69

Answer 1

The Stock price expected in 3 years from today is $\bold{\ 41.69}$

Solution:

The stock value is the largest number or the lowest number that anyone is ready to pay for such an item. Prices for shares are focused on corporate income and revenue forecasts. If traders feel their income is up or it will continue to increase, they offer up the stock price

$\text { Stock price }=\ 35.50$

$\text { Growth rate }=5.50 \%$

$\text { Future Years }=3$

$\mathrm{P} 3=\mathrm{P} 0(1+\mathrm{g}) 3 = \ 41.69$