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A firm is expected to pay a dividend of $1.15 next year and $1.30 the following...

A firm is expected to pay a dividend of $1.15 next year and $1.30 the following year. Financial analysts believe the stock will be at their price target of $30 in two years. Compute the value of this stock with a required return of 11.1 percent. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

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Answer #1

Value of stock=Future dividend and value*Present value of discounting factor(rate%,time period)

=1.15/1.111+1.3/1.111^2+30/1.111^2

which is equal to

=$26.39(Approx).

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