Answer:
the value of the stock is $31.50
Explanation:
The computation of the value of the stock is shown below
As we know that
The value of the stock is = Dividend × (1 + growth rate) ÷ (required rate of return - growth rate)
= $1.20 × (1 + 0.05) ÷ (9% - 5%)
= $31.50
hence, the value of the stock is $31.50
We simply applied the above formula
