The Cricket Co. just paid a dividend of $1.60 per share on its stock. The dividends are expected to grow at a constant rate of 4 percent per year indefinitely. Investors require a return of 12 percent on the company’s stock. a. What is the current stock p

a. The current stock price can be found using the formula for a constant growth perpetuity: Stock price = (Dividend / (Required return - Growth rate)). Plugging in the given values, we get: Stock price = ($1.60 / (0.12 - 0.04)) = $20. b. To find the stock price in 3 years, we can use the formula for future value of a present amount with continuous compounding: Stock price in 3 years = Stock price * e^(Rate * Time). Plugging in the given values, we get: Stock price in 3 years = $20 * e^(0.08 * 3) = $27.46. c. Similarly, to find the stock price in 9 years, we use the same formula: Stock price in 9 years = Stock price * e^(Rate * Time). Plugging in the given values, we get: Stock price in 9 years = $20 * e^(0.08 * 9) = $44.08.