Answer:
$34.08
Explanation:
a.) Price = Dā / (r-g) whereby;
Dā = expected dividend next year
r = required return
g = growth rate
Dā = Dā*(1+g) = 3.12* (1.065) = 3.3228
So, Price = 3.3228 / (0.1625-0.065) = $34.08
b.)The constant growth model can be used if a stockās expected constant growth rate is less than its required return