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Whited Inc.'s stock currently sells for $35.25 per share. The dividend is projected to increase at a constant rate of 5.25% per year. The required rate of return on the stock, rs, is 11.50%. What is the stock's expected price 5 years from now

Answer :

Answer:

$45.47

Explanation:

Data provided as per the given question below:-

Stock's Current Price = $35.25

Growth rate = 5.25%

Years = 5

The computation of stock's expected price is shown below:-

Stock's expected price = Stock's Current Price × (1 + growth rate)^5

= $35.25 × (1 + 5.25%)^5

= $35.25 × (1.0525)^5

= $35.25 × 1.29

= $45.47

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