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Assume that the expected future dividends (D) at end of periods 1,2, and 3, as well as the expected future price (P) at end of
Assume that the expected future dividends (D) at end of periods 1,2, and 3, as well as the expected future price (P) at end of period 3 for a stock are as follows: D1 = $1.20, D2 = $1.40, D3 = $1.55, and P3 = $95 . What should be the stock's expected price today, (i.e. P0 )? I encourage you to draw a time line clearly indicating the situation. Assume the required return is 8.8 percent. Answer to 2 decimal places.
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