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?
Calculation of the expected price of the stock in 3 years:-
Expected price of stock for 3 years
P0 = 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.