The common stock of Big Birds Unlimited has a required return of 8 percent and a growth rate of 4 percent

Answer:

The current price of the stock can be computed by using the following formula:

Current price = Current Dividend per share/(Required returns – Growth)

                                = $ .624/(0.08-0.04)

                                = $ 15.60

This concept of computing current price is rampantly used in finance. The last year dividend has to normalized to current year using the growth rate. Current year dividend per share = Last year dividend (1+ growth rate) = 0.60 (1+0.04) =$ 0.624

Hence, correct option is $ 15.60