Gordon growth model is the model used in calculating the intrinsic value of the stock where the future dividends of the stock are known.  The dividends must grow at a constant rate. The first step is to identify the formula to use in the calculation (HAYES, 2019).

P_o = D_o (1+g)                             Where D_o is the dividend that will be paid over the years.

(K_e – g)                                           g is the growth of the dividend over the years

K_e   is the rate of return that is required

P_o is the current price of the stock

The second step is the implementation of the project by inserting the figure into the formula

Po = $3 (1+ 0.07)

(0.18 – 0.07)

=   $3 (1.07)

0.11

=      3.21

0.11

Answer 29.18

References

HAYES, A. (2019). Gordon Growth Model. Retrieved from https://www.investopedia.com/terms/g/gordongrowthmodel.asp