Answer: $86.57
Explanation:
The current share of price can be computed as:
Share price(Present value of annuity )= [tex]C\times [\dfrac{1-(1+i)^{-n}}{i}][/tex], where C =each annuity payment, i= interest rate, n = number of periods.
Present value of annuity = [tex]14.70\times [\dfrac{1-(1+0.11)^{-10}}{0.11}][/tex]
[tex]=14.70\times [\dfrac{1-(1.11)^{-10}}{0.11}]\\\\=14.70\times [\dfrac{1-0.3522}{0.11}]\\\\=14.70\times [\dfrac{1-0.3522}{0.11}]\\\\=14.70\times [\dfrac{0.6478}{0.11}]\\\\=14.70\times (5.889)=\$86.57[/tex]
Hence, the current share price= $86.57
