Answer to Question #277837 in Economics for Char

Question #277837

Jane bought 100 shares. She sold the shares after 2 years at the price of 20. Over the 2 years, the company paid dividends of £1 and £1.50 per share each year. The interest rate remained the same for 2 years at 10%. What would be the current fair price for the stock?

Expert's answer

The current fair price for the stock is:

"P = D\/r = 1.5\/0.075 = 20."

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