Burkhardt Corp. pays a constant $13.80 dividend on its stock. The company will maintain this dividend...
Burkhardt Corp. pays a constant $13.80 dividend on its stock.
The company will maintain this dividend for the next seven years
and will then cease paying dividends forever.
If the required return on this stock is 9 percent, what is the
current share price? (Do not round intermediate
calculations and round your answer to 2 decimal places, e.g.,
32.16.)
Share price
$
Homework Answers
current share price=13.80*Present value of annuity factor(9%,7)
Present value of annuity=Annuity[1-(1+interest rate)^-time period]/rate
=13.80[1-(1.09)^-7]/0.09
=13.80*5.03295284
=$69.45(Approx).
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