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I know the answer but I wanted to know how to work the problem and the...

I know the answer but I wanted to know how to work the problem and the formulas. Thank you!

ORcell Co. has the following dividend policy. Next year, the company will pay a dividend of $3. In year 2 the company will pay a dividend of $2.75. After year 2, the company expects to decrease its dividend at a constant rate of 3% per year indefinitely. If the return required by share holders is 13%, what is the price of the stock today?

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Answer #1

B4 =+B3*1.03 fr в А 1 2 D1 3 D2 4 D3 5 Stock worth in 2 years 6 co PVIF @ 13% Present value 0.885 $ 0.783 $ 2.15 2.65 3.00 2.

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