Last week Railway Tours paid its annual dividend of 120 per

Last week, Railway Tours paid its annual dividend of $1.20 per share. The company has been reducing the dividends by 10 percent each year. What is the value of this stock at a discount rate of 13 percent? $27.00 $36.00 $3.71 $4.70 $8.31

P0 = D1/(ke-g) Where P0 is the price Ke is the required return 13.00% g is the growth rate -10.00% D1 is dividend at end of year = 1.20 *.90 1.08 P0 = 1.08/(13%-(-10%) P0 = 1.08/(23%) P0 = $4.70