Answer:
$20.64
Explanation:
Use the rate of return formula to solve for the new price;
r = ( P1 +Div1 -P0)/P0
whereby;
r = rate of return = 10.8% or 0.108 as a decimal
Div1 = Next year's dividend amount = $0.51
P1 = next year's stock price =?
P0 = Current stock price = $19.09
Next, plug in the numbers to the formula;
0.108 = (P1 + 0.51 - 19.09) / 19.09
Multiply both sides by 19.09;
2.0617 = P1 -18.58
Add 18.58 on both sides;
2.0617 + 18.58 = P1
20.64 = P1
Therefore, you need to sell the share at $20.64
