a$.$ Suppose a company currently pays an annual dividend of $$2\mathrm{.}00$ on its common stock in a single annual installment, and management plans on raising this dividend by $6\mathrm{.}5$ percent per year, indefinitely. If the required return on this stock is $8$ percent, what is the current share price? Note: Do not round intermediate calculations and round your answer to $2$ decimal places, e$.$g$.,32\mathrm{.}16.$b$.$ Now suppose the company in part $($a$)$ actually pays its annual dividend in equal quarterly installments; thus, the company has just paid a dividend of $$\mathrm{.}50$ per share, as it has for the previous three quarters. What is your value for the current share price now? $($Hint: Find the equivalent annual end$-$of$-$year dividend for

Problem $7-32$ Stock Valuation $[$LO $1]$

Most corporations pay quarterly dividends on their common stock rather than annual dividends. Barring any unusual circumstances during the year, the board raises, lowers, or maintains the current dividend once a year and then pays this dividend out in equal quarterly installments to its shareholders.

a$.$ Suppose a company currently pays an annual dividend of $$2\mathrm{.}00$ on its common stock in a single annual installment, and management plans on raising this dividend by $6\mathrm{.}5$ percent per year, indefinitely. If the required return on this stock is $8$ percent, what is the current share price?

Note: Do not round intermediate calculations and round your answer to $2$ decimal places, e$.$g$.,32\mathrm{.}16.$

b$.$ Now suppose the company in part $($a$)$ actually pays its annual dividend in equal quarterly installments; thus, the company has just paid a dividend of $$\mathrm{.}50$ per share, as it has for the previous three quarters. What is your value for the current share price now? $($Hint Find the equivalent annual end$-$of$-$year dividend for each year$)$

Note: Do not round intermediate calculations and round your answer to $2$ decimal places, e$.$g$.,32\mathrm{.}16.$

Answer is complete but not entirely correct.

$\backslash$table$[[$a$.$ Current share price,$$,142\mathrm{.}000$