A stock is expected to pay $0.80 per share every year indefinitely. If the current price of the stock is $18.90, and the equity cost of capital for the company that released the shares is 6.4%,
Required:
Question 1: What price would an investor be expected to pay per share five years into the future?
- $22.65
- $20.43
- $21.23
- $12.50
Note: Show all workings.