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NBL paid a dividend current year of $3.00 per share. Dividends are expected to grow at...

NBL paid a dividend current year of $3.00 per share. Dividends are expected to grow at a rate of 5 percent per year from now on. Given the risk of the Bank, the correct discount rate for this bank is 14 percent. What should the value of Bank’s stock be in the market?

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Answer #1
Solution:
Current Dividend : $ 3 per share Growth Rate : 5% PA
Bank's Discount Rate : 14% PA
Current Stock Price : Current Dividend (1+ Growth Rate)
Cost of Capital - Growth Rate
Current Stock Price :    3 (1+ 0.05)
    0.14 - 0.05
Current Stock Price : 3.15
0.09
Current Stock Price : $35.00 Per Share
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