Answer:
Price of stock = $55.08
Explanation:
The price of a stock is the present value of the future dividends discounted at the required rate of return.
P = D/(r-g)
P-price of stock today, D- Dividend in year's time, r- required rate of return,
g- growth rate in dividend
Using the following parameters:
P =?, r- 11%, g- 5.1%
P = 3.25/(0.11-0.051)
P = 55.08474576
Price of stock = $55.08