Prairies Oil Sands Inc. is expected to pay a dividend of $1 in one year. If the dividend growth rate is 2 percent forever and the required return is 10 percent, what should the stock be sold for five years from now?
A. $13.53
B. $13.80
C. $14.08
D. $14.62
Div1 = $1
Based on basic time value of money,
FV = PV * (1 + r)n
Div6 = Div1 * (1 + 10%)5
Div6 = $1 * (1 + 2%)5 = $1.1041
Prairies Oil Sands Inc. is expected to pay a dividend of $1 in one year. If...
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