Kelly Enterprises' stock currently sells for $35.25 per share. The dividend is projected to increase at a constant rate of 4.75% per year. The required rate of return on the stock, rs, is 11.50%. What is the stock's expected price 5 years from now?
A) $40.17
B) $41.20
C) $42.26
D) $43.34
E) $44.46

Question

Quizplus · Accepted Answer

$\begin{array}{lr}
\text { Growth rate } & 4.75 \% \
\text { Years in the future } & 5\
\text { Stock price } &  \$ 35.25\
P_{5}=P_{0}(1+g)^{5}= &  \$ 44.46
\end{array}$

Kelly Enterprises' Stock Currently Sells for $35