Antiques R Us is a mature manufacturing firm. The company just paid a dividend of $9.65,...

Question

Question

Answer 1

Answer #1

Last Dividend, D0 = $9.65
Growth Rate, g = -4.00%
Required Return, rs = 12.00%

Expected Dividend, D1 = D0 * (1 + g)
Expected Dividend, D1 = $9.65 * (1 - 0.04)
Expected Dividend, D1 = $9.264

Current Price, P0 = D1 / (rs - g)
Current Price, P0 = $9.264 / (0.12 + 0.04)
Current Price, P0 = $9.264 / 0.16
Current Price, P0 = $57.90

So, current share price is $57.90

Answer 2

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