Question

$20.00 per share is the current price for Foster Farms' stock. The dividend is projected to...

$20.00 per share is the current price for Foster Farms' stock. The dividend is projected to increase at a constant rate of 5.50% per year. The required rate of return on the stock, rs, is 9.00%. What is the stock's expected price 3 years from today?

Select the correct answer.

a. $23.48
b. $23.04
c. $23.70
d. $23.92
e. $23.26
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Answer #1

Answer: a. $23.48 Workings: Stock Price (PO) = Groth Rate (g) $20.00 5.50% The stocks expected price 3 years from Price at y

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