Hatstand and Bandstand Inc. stock is selling for $38. The company has been maintaining a constant growth rate of dividends of 5 percent. If the required rate of return for this company is 14 percent, what was the most recent dividend paid by the company?
I thought the answer was 3.42 because: D= 38 X (.14-.05) =3.42, but I’m told the answer is actually 3.26. Would someone be able to explain to me where I went wrong?