Problem:
Stock Values. Banya, Inc., just paid a dividend of $2.20 per share on its stock. The dividends are expected to grow at a constant rate of 4 percent per year, indefinitely.
Required:
Question: If investors require an 11 percent return on Banya stock, what is the current price? What will the price be in three years? In 15 years?
Note: Provide support for your underlying principle.