Problem:
Feltwater Furniture has 120,000 shares of stock outstanding. The firm expects to earn net income of $325,000 next year with annual increases of 3 percent per year thereafter. The firm also expects to pay out 75 percent of its net income in dividends and share repurchases. The required return is 14 percent.
Task:
Question 1: What is its share price? Elucidate comprehensively and show all workings.