Answer:
What is the current stock price?
$25.57
Explanation:
The company just paid a Dividend of $1,50, the next year they will pay a Dividend of $1,50 plus 1,04 (Growth rate), Dividend next year = $1,56
To a constant growth of dividends and assuming it's a constant growth we'll applied the Gordon growth model (GGM), which state that a price per share it's determined by the next formula:
Price per Share = D / (r - g) Where:
D = the estimated value of next year's dividend
r = The required rate of return
g = the constant growth rate
To this case the value is: ($1,50 * 1,04) / (10,1%-4%) = $1,56 / 0,061 = $25,57
