Burnett Corp. pays a constant $12 dividend on its stock. The company will maintain this dividend for the next 5 years and will then cease paying dividends forever. |
If the required return on this stock is 7 percent, what is the
current share price? |
current share price = present value of next 5 years dividends
present value = future value / (1 + required return)number of years
current share price = ($12 / (1 + 7%)1) + ($12 / (1 + 7%)2) + ($12 / (1 + 7%)3) + ($12 / (1 + 7%)4) + ($12 / (1 + 7%)5)
current share price = $49.20
Burnett Corp. pays a constant $12 dividend on its stock. The company will maintain this dividend...
Burnett Corp. pays a constant $27 dividend on its stock. The company will maintain this dividend for the next 11 years and will then cease paying dividends forever. If the required return on this stock is 13 percent, what is the current share price? Multiple Choice $173.51 $297.00 $161.22 $153.55 $150.48
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