$10-5$: Constant Growth Stocks

Valuation of a constant growth stock

A stock is expected to pay a dividend of $$1\mathrm{.}50$ the end of the year $($that is$,D_1=$$$1\mathrm{.}50),$ and it should continue to grow at a constant rate of $7\%$ a year. If its required return is $13\%,$ what is the stock's expected price $5$ years from today? Round your answer to two decimal places.