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What is a fair price for the stock in exactly six years

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Reference no: EM133001035

A share of stock has a dividend that is expected to grow at a constant perpetual rate.

During the next year (t=0 to t=1), the dividend yield is expected to be 4.3%.

The capital gains yield for the next year is expected to be 2.17%.

Dividends are paid at the year's end.

Problem 1: If the dividend paid at the end of the year (at t=1) is expected to be $7.07, what is a fair price for the stock in exactly 6 years from today?

Reference no: EM133001035

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