You are considering purchasing stock. the stock is expected to pay a dividend of $94 per share. the consensus of investors is that these dividends will increase at a rate of 4 percent per year for the indefinite future, and the interest rate is 12 percent. the price of the stock should be $

PV=1,175

Explanation:

this question can be solved thinking as  if we have a perpetuity, it is a future infinite payments, but in this particular case we have those payments (dividends) increasing over the time, so we can apply the next formula:

where PV is the present value of the future payments, i is the interest rate and k is the annual increasing, so applying to this data we have:

answer; specific performance;

hello the answer is d