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#1 After careful analyzing AutoZone stock, you think that it will trade for $100.00 in one year. AutoZone has announced a div
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Answer #1

Dividend for next year (D1) = $1

Required return (Ke) = 15% = 0.15

Price of stock in 1 year (P1) = $100

Let Current stock price = (Po)

Po = (P1 + D1) / (1 + Ke)

Po = ($100 + $1) / (1 + 0.15)

Po = $87.826

or $87.83 (rounded off to 2 decimals

Stock worth today is $87.83

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