Question

You've collected the following information from your favorite financial website 52-Week Price Hi PE Close Net YId % Ratio Price Chg 13.90 24 40.43 -01 Div Lo 10.43 33.42 69.75 13.95 20.74 Stock (Cur div) 77.40 55.81 130.98 50.24 35.00 Palm Coal.36 Lake Lead Grp 1.54 SIR 2.25 DR Dime .80 Candy Galore.32 2.6 3.8 2.5 5.2 1.5 6 0 89.02 3.07 15.43 -26 18 28 According to your research, the growth rate in dividends for SIR for the next five years is expected to be 20 percent. Suppose SIR meets this growth rate in dividends for the next five years and then the dividend growth rate falls to 5.25 percent indefinitely. Assume investors require a return of 15 percent on SIR stock. According to the dividend growth model, what should the stock price be today? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Current stock price

Answer 1