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Gee-Gee's is going to pay an annual dividend of $2.05 a share next year. This year,...

Gee-Gee's is going to pay an annual dividend of $2.05 a share next year. This year, the company paid a dividend of $2 a share. The company adheres to a constant rate of growth dividend policy. What will one share of this common stock be worth six years from now if the applicable discount rate is 11.2 percent?

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Cost of equity ke- 11.20% 2.50% $2.05 (2.05-2)/2 Price D1/(ke-g) $23.56 2.05 ÷ ( 11.2%-2.50%) D7/(ke-g) $27.33 (2*1.0257)/(0.112-0.025) Stock price 6 years from today

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