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Green Forest Packaging stock pays quarterly dividends and has an expected annual return of 6.12 percent....

Green Forest Packaging stock pays quarterly dividends and has an expected annual return of 6.12 percent. The stock is expected to have a price of 56.03 dollars in 3 months from today and is expected to have a price of 56.88 dollars in 6 months from today. What is the current price of Green Forest Packaging stock if the firm is expected to pay quarterly dividends forever and the quarterly dividend in 3 months from today is expected to be 3.42 dollars?

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Answer #1

P0 = [P0.25 +D0.25] / [1 + r]n

= [$56.03 + $3.42] / [1 + (0.0612 / 4)]

= $59.45 / 1.0153 = $58.55

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