How much are you willing to pay for one share of Jumbo Trout stock if the...
How much are you willing to pay for one share of Jumbo Trout stock if the company just paid a $0.70 annual dividend, the dividends increase by 2.5 percent annually, and you require a 10 percent rate of return?
Homework Answers
P0 = Annual dividend * (1 + Percentage increase in dividend) / Required rate of return - Percentage increase in dividend
= $0.70 * (1 + 0.025) / 0.10 - 0.025)
= $9.57
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How much are you willing to pay for one share of Jumbo Trout
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