In dividend growth model, |
P = D1/Er-g |
Where, |
P= price of the share |
D1= Expected dividend |
g= growth rate |
Er= required return |
Current price of the stock, |
P = $3.60/(0.145-(-0.03)) |
P = $3.60 / 0.175 |
P = $20.57 |
Therefore, price I would pay for the stock now is $20.57. |
Therefore, 5th option is the correct answer. |
JLT Corp.'s management just announced that next year's annual dividend will be $3.60. This represents a...