Question:

Banana Company just paid a dividend of $5 per share. If dividends have a growth rate of 5 percent and you require 12 percent return, what is the value of the stock?

43.75

71.42

105.00

75.00

41.67

96.42

I had thought it would have been 71.42 because I divided 5/.12-.05 = .7142 X 100+ 71.42%, but I'm told the answer is 75. Would someone be able to explain where I went wrong?

Thanks!