Sorenson Corp.'s expected year-end dividend is D₁ = $1.50,its required return is r_s = 12.00%,its dividend yield is 8.00%,and its growth rate is expected to be constant in the future.What is Sorenson's expected stock price in 7 years,i.e.,what is P₇?

Question

Quizplus · Accepted Answer

The correct answer is A because the expected stock price in 7 years is $24.67. This can be calculated using the formula: P7 = D1 / (rs - g) * (1 + g)^7, where D1 is the expected year-end dividend, rs is the required return, g is the growth rate, and 7 is the number of years.