Answer:
$34.29
Explanation:
Spacefood will pay a dividend of $2.40 per share
The dividend is expected to grow by 6%
= 6/100
= 0.06
The firm's equity cost of capital is 13%
= 13/100
= 0.13
Therefore, the current value of a single share of spacefood stock can be calculated as follows
Po= dividend/(equity cost of capital-growth rate)
= 2.4/(0.13-0.06)
= 2.4/0.07
= $34.29
Hence the Current value of a single share of Spacefoods's stock is $34.29
