Ask Question
27 August, 21:00

A stock has dividends that are expected to grow at 5% per year forever, if the price of the stock is $48.58 today, what will be the stock's price in 5 years? (Enter only numbers and decimals in your response. Round to 2 decimal places for your answer.)

+4
Answers (1)
  1. 27 August, 21:37
    0
    Growth rate (g) = 5% = 0.05

    Current market price (Po) = $48.58

    The stock's price in 5 years

    P5 = Po (1 + g) n

    P5 = $48.58 (1 + 0.05) 5

    P5 = $48.58 (1.05) 5

    P5 = $62.00

    Explanation:

    The stock's price in 5 years time is a function of current market price subject to 5 years growth.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “A stock has dividends that are expected to grow at 5% per year forever, if the price of the stock is $48.58 today, what will be the stock's ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers