Shares of Javier, Inc. common stock currently trade on the market for $90 per share.  The firm paid a $3.00 per share dividend this year, and that dividend is expected to grow by 5% per year indefinitely.

• What is Javier’s expected dividend for next year?

 

• If you believe that the appropriate required return on equity (r_e) for Javier is 8%,
•  what would you estimate the value per share of Javier stock to be?
• In that case, would you advise investors to buy, hold, or sell Javier stock?  Explain why.