Macy’s just paid a dividend of $1.80. If the required return is 12% and the dividend...
Macy’s just paid a dividend of $1.80. If the required return is 12% and the dividend is expected to grow at a constant rate of 6% what is the most you would be willing to pay for the stock today?
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Homework Answers
value = dividend next year/(Required return - growth rate)
=>
value of stock = 1.7*(1+0.06)/(0.12-0.06)
= 30.03
hence choose d)
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