Answer:
The current stock price is $25.
Explanation:
Since the dividend is $1.50
The required Rate of return is 10.26%
Constant growth rate is 4.0%
Therefore,
The current stock price is
= dividened x (1+constant growth rate)/required Rate of return - constant growth rate.
=$1.50 x (1+ 4%)/10.26% - 4.0%
=$1.50 x (1+0.04)/0.1026 - 0.04
= $1.50 x (1.04)/0.0626
=$1.56/0.0626
=$24.92
The current stock price is therefore $25. Approximated to the nearest dollar.
