Last year, Wilderness Adventures paid an annual dividend of $2.40 per share. The firm recently announced...
Last year, Wilderness Adventures paid an annual dividend of $2.40 per share. The firm recently announced that it will increase its dividend by a constant 6.0 percent annually. What is one share of this stock worth today at a required rate of 15.2 percent? Need help on [(2.40*1.06)/(.152-.09)]. where does the .09 come from?
Homework Answers
Current price = Dividend * (1 + growth rate) / (Required return - growth rate)
= ($2.40 * (1 + 0.06)) / (0.152 - 0.06)
= $2.544 / 0.092
= $27.65
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