An analyst estimates that a stock will pay a $2 dividend next year and that it will sell for $40 at year-end. If the required rate of return is 1 5%, what is the value of the stock?

An analyst estimates that a stock will pay a $2 dividend next year and that it will sell for $40 at year-end. If the required rate of return is 1 5%, what is the value of the stock?


A. $33.54.

B. $36.52.

C. $43.95.



Answer: B


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