Ask a question.. Anton, Inc., just paid a dividend of $3.00 per share on its sto

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Anton, Inc., just paid a dividend of $3.00 per share on its stock. The dividends are expected to grow at a constant rate of 5.25 percent per year, indefinitely. Assume investors require a return of 12 percent on this stock.

What is the current price? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

What will the price be in four years and in sixteen years? (Do not round intermediate calculations.Round your answers to 2 decimal places (e.g., 32.16).)

Anton, Inc., just paid a dividend of $3.00 per share on its stock. The dividends are expected to grow at a constant rate of 5.25 percent per year, indefinitely. Assume investors require a return of 12 percent on this stock.

Explanation / Answer

Anton, Inc., just paid a dividend of $3.00 per share on its stock. The dividends are expected to grow at a constant rate of 5.25 percent per year, indefinitely. Assume investors require a return of 12 percent on this stock.

Requirement 1:

Current price= (3x1.0525)/(.12-.0525)= $46.78

Requirement 2:

Price in 4 years= 46.78x1.0525^4= $57.405

Price in 16 years= 46.78x1.0525^16= $106.08

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