A stock is expected to pay $0.80 per share every year indefinitely. If the current price of the stock is $18.90, and the equity cost of capital for the company that released the shares is 6.4%, what price would an investor be expected to pay per share five years into the future? $12.50 $20.43 $21.23 $22.65 None of The Above
SOLUTION PREVIEW
r = D1 + g
P0
P0 = D1/ (r – g)
