Calculation of current value of shares of a stock under given dividend growth rate.
Over the past 5 years, the dividends of the Gamma Corporation have grown from $0.70 per share to the current level of $1.30 per share (D0). This growth rate is expected to continue for the foreseeable future. What is the value of a share of Gamma Corp. common stock to an investor who requires a 20% return on an investment?