A company has just paid a dividend of 3.28$. Its discount rate is 8.9%, and the...
A company has just paid a dividend of 3.28$. Its discount rate is 8.9%, and the expected perpetual growth rate is 5.5%. What would you expect to be the stock's price TODAY?
Express your answer in dollars, rounded to the nearest cent (2 decimals).
Homework Answers
Stock price = next year divided /(discount rate - growth rate)
Next year divided = current divided *(1+ growth rate)
=3.28*(1+0.055 )= 3.4604
Stock price = 3.4604/(8.9%- 5.5%)
= 3.4604/3.40%
= 101.78
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