Question: Current price = D 1 / ( Required return - Growth rate ) = ( 2 . 5 * 1 . 0 5 ) /

Current price=D1/(Required return-Growth rate)
=(2.5*1.05)/(0.12-0.05)
=37.5
P5=Current price*(1+Growth rate)^5
=37.5*(1.05)^5
=$47.86(Approx).

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