Pharmacology just paid an annual dividend of $1.80 per share. It’s a mature company, but future EPS and dividends are expected to grow with inflation, which is forecasted at 5.00% per year. The nominal cost of capital is 11.75%. What is Pharmecology’s current stock price? (Do not round intermediate calculations. Round your answer to 2 decimal places.) What would be Pharmecology’s current stock price using forecasted real dividends and a real discount rate?

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Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Pharmacology just paid an annual dividend of $1.80 per share. It’s a mature company, but future EPS and dividends are expected to grow with inflation, which is forecasted at 5.00% per year. The nominal cost of capital is 11.75%.

  1. What is Pharmecology’s current stock price? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
  2. What would be Pharmecology’s current stock price using forecasted real dividends and a real discount rate? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
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