Answer:
$29.47
Explanation:
Current Dividend, D0 = $0.85
Required Return, r = 7.00%
Growth Rate, = 4.00%
Expected Dividend, D1 = D0 * (1 + g)
Expected Dividend, D1 = $0.85 * 1.04
Expected Dividend, D1 = $0.884
Value of Stock = D1 / (r - g)
Value of Stock = $0.884 / (0.07 - 0.04)
Value of Stock = $0.884 / 0.03
Value of Stock = $29.47