Question

P-FIN301-003-21651 > Assignments Chapter 7 Quiz Chapter 7 Quiz FIN 301 Business Finance Elizabeth McDanal & Submit Quiz Quiz: Chapter 7 Quiz This Question: 2 pts 6 of 60 complete This Quiz: 12 pts possible yLabs and in Common stock value Constant growth Use the constant growth model (Gordon growth model) to find the value of the firm shown in the following table Click on the icon here order to copy the contents of the datatable below into a spreadsheet) Dividend expected next Dividend growth rate Required return The value of the firm's stockis (Round to the newest cont.) Enter your answer in the answer box MacBook Air

Answer 1

Dividend Expected next year (D1) = $1.28

growth rate = 6.7%

Required Return(ke) = 13.7%

$Price= \frac{D_{1}}{Ke-g}$

$Price= \frac{1.28}{(0.137-0.067)}$

Price = $ 18.29

So, Value of the firm's stock is $ 18.29

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