Cost of equity = Risk free rate + Beta * market risk premium= 2.74% + 1.02* 5.27% = 8.1154%= approx 8.12%
Current dividend, D0 = $1.92
Dividend next year, D1 = 1.92* (1+ 21.81%) = 2.34
D2 = 2.24*(1.2181) = $ 2.85
D3 = 2.85*1.2181 = .$ 3.47
Terminal Value of dividend = D3*(1+g)/(k-g) = 3.47*(1+4.37%)/(8.12% - 4.37%)
= $ 96.58
Value of stock = 2.34/(1+8.12%) + 2.85/(1+8.12%)^2 + 3.47/(1+8.12%)^3 + 96.58/(1+8.12%)^3
= $ 85.34
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