A stock is expected to pay a dividend of $2.75 at the end of the year (i.e.,

Question:

A stock is expected to pay a dividend of $2.75 at the end of the year (i.e., D₁ = 2 75), and it should continue to grow at a constant rate of 5% a year. If its required return is 15%, what is the stock’s expected price 4 years from today?

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...