Java jane's first coffeehouse was very successful due to the unique flavors, on-site baked goods, and inviting ambiance. the own
1 answer:
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Answer:
E. $41.69
Explanation:
We know,
Value of stock () =
[In case of constant growth model]
= Next year or expected dividend
= required rate of return
g = growth rate = 5.50%
However, as there is no information regarding expected dividend, we will use the alternative formula to calculate the stock's expected price 3 years from today.
=
×
Here, current stock price, = $35.50
Therefore, = $35.50 ×
= $35.50 × 1.1742
Stock's expected price 3 years from now = $41.69 (rounded to two decimal places)
Therefore, option E is the answer.