Common stock valuation Sanford common stock is expected to p

(Common stock valuation) Sanford common stock is expected to pay $3.25 in dividends next year, and the market price is projected to be $51.60 per share by year-end. If investors require a rate of return of 11 percent, what is the current value of the stock? The current value of the stock is (Round to the nearest cent.)

Solution

Ans Current Value of Stock is $ 29.55

P0 =	Price of Share
D1 =	Current Dividend
Ke =	Cost of Equity
P0 =	D1 / Ke
P0 =	3.25 / 11%
P0 =	$ 29.55