A company is expected to pay a dividend of 124 per share


A company is expected to pay a dividend of $1.24 per share one year from now and $1.75 in two years. You estimate the risk-free rate to be 4.1% per year and the expected market risk premium to be 5.3% per year. In two years, you expect the leading PE ratio to be 13. You also expect the earnings to be $4.07 in year 2 and $5.19 in year 3. The beta of the stock is 1.1. What would be an appropriate estimate of the stock price today?

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Financial Management: A company is expected to pay a dividend of 124 per share
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