Kay Jay Inc Is Expected To Pay Its First Ever Annual Dividend One Year From Now

Kay Jay, Inc. is expected to pay its first ever annual dividend one year from now, based on an expected earnings per share of $2.50 and a payout ratio of 40%. Future earnings per share are expected to grow indefinitely at 4% per year, and Kay Jay is expected to maintain the 40% payout ratio. If Kay Jay’s cost of equity capital is 15%, at what price should Kay Jay’s stock to sell for today?