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Stock price at the end of year 4

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If a corporation pays annual dividends of $5. If the stock price can be purchased for $40.00 at the end of year 0, what price will the stock be worth at the end of year 4 to earn an 8% return over the 4 years.

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The solution explains how to determine the stock price at the end of year 4

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The price would be such that the present value of the cash flows from the stock is equal to the price in year 0. The cash flows from the stock are $5 per year for 4 years and the price to be ...

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