paid an annual dividend of $2.10 yesterday. If future dividends are expected to grow at a...
paid an annual dividend of $2.10 yesterday. If future dividends are expected to grow at a rate of 8 percent, and the required rate of return on this stock is 15 percent, the fair price of this stock today is:
|
a. |
$27.46 |
|
b. |
$33.91 |
|
c. |
$32.40 |
|
d. |
$30.00 |
Homework Answers
As per Constant Growth Model,
Stock Price = D0(1 + g)/(r - g)
Stock Price = 2.10(1.08)/(0.15 - 0.08)
Stock Price = $3.40
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