A stock will pay a 2 dividend next year a 225 the year


A stock will pay a $2 dividend next year, a $2.25 the year after, and then a $2.50 dividend the following year. An investor believes that she can then sell the stock for $50 at the end of a 3-year holding period. The risk-free rate of interest is 7 percent, the market return is 13 percent, and the stock's beta is 1. What is the value of the stock?

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Finance Basics: A stock will pay a 2 dividend next year a 225 the year
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