A stock just paid a dividend of $1.3. The required rate of return is 11.6%, and the constant growth rate is 3%. What is the current stock price? Enter with two decimal places of precision (dollar and cents).
Show Work!
Current Stock Price = Expected Dividend / (Required Return - growth rate)
= [Current Dividend * ( 1+ growth rate)] / (Required Return - growth rate)
= [ $ 1.3 * ( 1+3%)] / (11.6% -3%)
= $ 15.57
Hence the correct answer is $ 15.57
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