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A company just paid a dividend of $1.40 per share. The consensus forecast of financial analysts...

A company just paid a dividend of $1.40 per share. The consensus forecast of financial analysts is a dividend of $1.70 per share next year, $2.30 per share two years from now, and $2.80 per share in three years. You expect the price of the stock to be $28 in two years. If the required rate of return is 8% per year, what would be a fair price for this stock today? (Answer to the nearest penny.)

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Answer #1

1.57 D1 D2 Stock price in 2-Years $ $ $ 1.70 2.30 28.00 PVIF @ 8% Present value 0.926 $ 0.857 $ 1.97 0.857 $ 24.01 Current st

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