Q: A company is expected to pay 5 dividend by the end of the year, after which the stock price is expected to beat 110. If the market capitalisation rate is 8%, what is the appropriate value for the stock price.
Stock price will depend on divided, market capitalisation, and expected value of the stock.
- Define a function "stock_price", that will depend on dividend, market capitalisation, and expected value of stock.
- Use the formula, stock price = (d+esp)/(1+r).
where:
d = dividend
esp = expected value of stock
r = market capitalisation rate
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