Sketchers just paid its annual dividend of $1.45 a share. All future dividends will be increased...

Question

Question

Sketchers just paid its annual dividend of $1.45 a share. All future dividends will be increased by 3.8 percent annually. What is one share of this stock worth if you require a 12 percent rate of return?

Answer 1

Answer #1

Worth of stock = D1 / required rate - growth rate

Worth of stock = (1.45 * 1.038) / 0.12 - 0.038

Worth of stock = 1.5051 / 0.082

Worth of stock = $18.35

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Answer 2

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