Answer to Question #215940 in Finance for Fady

Question #215940

OSAC’s stock is currently selling for $40 per share . The dividend is expected to increase at a constant rate of 7.50% per year and rs, is 9.00%. What is the stock's expected price 3 years from today?


1
Expert's answer
2021-07-13T11:58:31-0400

Calculation of the expected price of the stock in 3 years:-

Expected price of stock for 3 years 

Where,

P= Stock price = $40; growth rate (g) = 7.50%; and years in future = 3 years.

Expected price of the stock for 3 years 

Expected price of the stock for 3 years = $49.69.

Therefore, an expected price of the stock for the 3 years will be $49.69.

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