Problem:
The Erie Heating Company has been very successful in the past four years. Over these years, it paid common stock dividend of $4 in the first year, $4.20 in the second year, $4.41 in the third year, and its most recent dividend was $4.63. The company wishes to continue this dividend growth indefinitely.
Required:
Question: What is the value of the company's stock if the required rate of return is 12 percent?
Note: Explain all calculation and formulas.