West Side Co. is expecting the following dividends to be paid over the next 5 years: $3, $4, $5, $6, $7. Afterwards, the company pledges to maintain a constant growth rate of 2%, forever. If the required rate of return is 9%, calculate the current share price. (Round to 2 decimals)

$85.07

Explanation:

The computation of the current share price is shown below:

Year          DividendTerminal valueTotal cash flowPVIF at 9%Present value

1           $3.00                                  $3.00          0.9174$2.75  

2           $4.00                                   $4.00          0.8417$3.37

3           $5.00                                  $5.00          0.7722$3.86  

4          $6.00                                   $6.00          0.7084$4.25  

5          $7.00$102.00                          $109.00          0.6499$70.84      

                                                                                                                $85.07

The terminal value is

= 7 × 102% ÷ (9%-2%)  

2,283,000

explanation:

i just had to add it

you have to put the parentheses like this:

in fact, you have to perform the operation inside parentheses first, and then proceed in order: