J& j exporters paid a $1.80 per share annual dividend last month. the company is planning on paying $2.00, $2.50, $2.75, and $3.00 a share over the next four years, respectively. after that the dividend will be constant at $3.20 per share per year. what is the market price of this stock if the market rate of return is 13 percent?

The market price of this stock is $22.57.

In this question, we ignore last year's dividend of $1.80 as it is irrelevant.

We compute the Present Value (PV) of the dividends of each of the following four years as follows:

Next, we calculate the PV of dividends from the 5 year onwards. Here dividend is constant at $3.20 and is expected to be paid for ever. The PV of a perpetuity at the end of year 4 is:

The value of a perpetual dividend of $3.20 at the end of year 4 is $24.61538462  

Next we find the PV of the value of perpetual dividend as follows:

Market price of the stock = $22.57069872

answer; tech (a) is correct;

answer; blank(1); /// whitelisting; blank(2); // blacklisting;