Medical Corporation of America (MCA) has a current stock price of $36, and its last dividend (D0) was $2.40. In view of MCA’s strong financial position, its required rate of return is 12 percent. If MCA’s dividends are expected to grow at a constant rate in the future, what is the firm’s expected stock price in five years?
Please refer attached file for better clarity of formulas.
Required rate of return=12%
This solution describes the steps to calculate expected stock’s price in five years in plain text and in the attached Excel file.