Bakery just paid an annual dividend of $2.40 a share and is expected to increase that amount by 2.0 percent per year. You are planning to buy 1,000 shares of this stock in two years. If investors require a 14.5% return on Friendly Bakery's stock. What is the current stock price? How much should you expect to pay in total when you buy 1000 shares in two years?

Answer rating: 100% (QA)

To calculate the current stock price we can use the dividend discount model The formula for the pric... View the full answer