Answer:
52.48
Explanation:
the key to answer this is to keep in mind that we are giving the value of the increasing dividend 3.75%, so the theory says that present value of a perpetuity payment is as follows:
[tex]PV=\frac{dividend}{i-k}[/tex]
where dividend is the payment as dividend, i is the interest rate and k is the increment of the dividend, so we have:
[tex]PV=\frac{3.28}{0.1-0.0375}[/tex]
[tex]PV=52.48[/tex]
so you will pay 52.48 for this stock today
