Find the fundamental price in one year of P1. The annual dividend of Safari Incorporated in the coming year is expected to be D1 = $2.25 and management expects to maintain a dividend growth rate of g...
Find the fundamental price in one year of P1. The annual dividend of Safari Incorporated in the coming year is expected to be D1 = $2.25 and management expects to maintain a dividend growth rate of g = 3% indefinitely. Investors require a return of R i = 10% on this type of stock. What is this stock's expected price in one year or P1?
29.89
32.65
$31.75
$33.11
$29.20
Homework Answers
Answer: $33.11
Explanation:
Stock Expected price in one year P1
= D2/(k-g)
= (2.25*103%)/(10%-3%) = $33.11
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