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Homework answers / question archive / If the next year's dividend is forecast to be $5
If the next year's dividend is forecast to be $5.00, the constant growth rate is 4%, and the discount rate is 16%, what would the current stock price be?
Dividend= $5
Constant Growth Rate = 4%
Discount Rate = 16%
Current price=D1/(Required return-Growth rate)
= 5/(16%-4%)
Current Price = $41.67
