Answer:
The value of MTB stock is closest to $12.50
Explanation:
The value of MTB stock is calculated using the below formula for the present of an annuity in perpetuity=dividend/expected rate of return
The expected rate of return in this instance is the equity cost of capital
Value of MTB stock=$1.50/12%
Value of MTB stock=$12.5
A rational investor a price for a stock today that reflects the future cash flows payable by a way of dividends payments promised by such stock considering the investor's rate of return as done above
