Finance

Fletcher Company's current stock price is $36.000, its last dividend was $2.40, and its required rate of return is 12%. If divends are expected to grow at a constant rate, g, in the future and if Rs is expected to remain at 12%, what is Fletcher's expected stock price 5 years from now?

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  1. First find g,
    g= rs-(D1/P) = 5.33%
    After 5 years
    P = (D1(1+g)^5)/(rs-g) = $ 46.37

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