Womack Toy Company’s stock is currently trading at $25 per share. The stock’s dividend is projected to increase at a constant rate of 7 percent per year. The required rate of return on the stock, Rs, is 10 percent. What is the expected price of the stock 4 years from today?
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Expert's answer
2020-06-29T18:59:53-0400
The rate of growth is 7%
therefore the expected price after 4 years,
"25*1.07^4= 32.77"
Therefore the expected price is 32.77 after four years.
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