Problem:
The Ackert Company's last dividend was $1.55. The dividend growth rate is expected to be constant at 1.5% for 2 years, after which dividends are expected to grow at a rate of 8.0% forever. The firm's required return (rs) is 12.0%.
Required:
Question: What is the best estimate of the current stock price?
a.37.05
b.38.16
c.39.30
d.40.48
e.41.70
Note: Provide support for rationale.