Problem:
Sorenson Corp.'s expected year-end dividend is D1 = 1.50, its required return is rS= 12.00%, its dividend yield is 8.00%, and its growth rate is expected to be constant in the future.
Required:
Question: What is Sorenson's expected stock price in 7 years, i.e., what is P7?
Note: Provide support for your underlying principle.