You are considering an investment in Ferri Industries' stock, which is expected to pay a dividend of $2.20 per share at

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You Are Considering An Investment In Ferri Industries Stock Which Is Expected To Pay A Dividend Of 2 20 Per Share At 1 (59.89 KiB) Viewed 78 times

You are considering an investment in Ferri Industries' stock, which is expected to pay a dividend of $2.20 per share at the end of the year (D1 = $2.20). The stock has a required return of 9% and a constant long-run growth rate of 5%. The stock is in equilibrium, so its current price also equals its intrinsic value. Assuming the market remains in equilibrium, what does the market believe will be the stock price at the end of 5 years? (That is, what is Ps?) 1. $55.00 2. $59.95 3. $63.67 4. $66.85 5. $70.20