Question

Storico Co. just paid a dividend of $1.85 per share. The company will increase its dividend by 24 percent next year and will then reduce its dividend growth rate by 6 percentage points per year until it reaches the industry average of 6 percent dividend growth, after which the company will keep a constant growth rate forever. If the required return on the company's stock is 14 percent, what will a share of stock sell for today? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Answer 1

We can calculate the current stock price as follows

Formula used in the excel sheet are as follows:

So,the price of stock comes out to be $ 33.26.

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