Throughout this problem assume that all cash flows are realized at the end of any given period. All periods are one year long. The risk free interest rate is 6% per year, while the cost of equity is 7% per year for all companies under consideration.

Company A will make a dividend payment of $10 in one year, which will then grow at a rate of 1% per year for ever after.

Question: Use the dividend discount model to calculate the current stock price for company A.