Financial analysts forecast Safeco Corp.’s (SAF) growth rate for the future to be 7 percent. Safeco’s recent dividend wa...

Question

Question

Financial analysts forecast Safeco Corp.’s (SAF) growth rate for the future to be 7 percent. Safeco’s recent dividend was $1.80.

What is the value of Safeco stock when the required return is 9 percent? (Round your answer to 2 decimal places.)

Answer 1

Answer #1

Current price=D1/(Required return-Growth rate)

=(1.8*1.07)/(0.09-0.07)

which is equal to

=$96.3

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Answer 2

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