Hudson Corporation will pay a dividend of $3.30 per share next year. The company pledges to increase its dividend by 3.30 percent per year indefinitely. |
If you require a return of 5.40 percent on your investment, how
much will you pay for the company's stock today? |
Multiple Choice
$150.86
$157.14
$163.43
$152.12
$36.72
Ans $157.14
P0 = | Price of Share |
D1 = | Current Dividend |
Ke = | Cost of Equity |
g = | growth rate |
P0 = | D1 / (Ke - g) |
P0 = | 3.30 / (5.40%- 3.30%) |
P0 = | 157.14 |
Hudson Corporation will pay a dividend of $3.30 per share next year. The company pledges to...
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