Edward Lewis is interested in purchasing the common stock of Sunland, Inc., which is currently priced...
Edward Lewis is interested in purchasing the common stock of Sunland, Inc., which is currently priced at $52.09. The company is expected to pay a dividend of $2.58 next year and to increase its dividend at a constant rate of 8.95 percent.
What should the market value of the stock be if the required
rate of return is 14 percent?
Homework Answers
The market value of the stock if the return is 14%
=Expected dividend/(r-g)
=2.58/(14%-8.95%)
=51.09
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