You are considering purchasing stock in Canyon Echo. You feel the company will increase its dividend...
You are considering purchasing stock in Canyon Echo. You feel the company will increase its dividend at 3.1 percent indefinitely. The company just paid a dividend of $3.86 and you feel that the required return on the stock is 12.5 percent. What is the price per share of the company's stock?
Homework Answers
Current Price of Share = Dividend (1+ Growth Rate)/ Required Return - Growth Rate
Current Price of Share = $3.86(1+0.031)/(0.125-0.031) = $42.34
The price per share of the Company's Stock is $42.34.
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