Stagnant Iron and Steel currently pays a $5.50 annual cash dividend (D0). They plan to maintain the dividend at this level for the foreseeable future as no future growth is anticipated. If the required rate of return by common stockholders (Ke) is 14 percent, what is the price of the common stock? (Do not round intermediate calculations. Round your answer to 2 decimal places)
Price_____ ?
Price of common stock=Annual dividend/Required return
=(5.5/0.14)
which is equal to
=39.29(Approx).
Stagnant Iron and Steel currently pays a $5.50 annual cash dividend (D0). They plan to maintain...
Stagnant Iron and Steel currently pays a $6.45 annual cash dividend (D0). They plan to maintain the dividend at this level for the foreseeable future as no future growth is anticipated. If the required rate of return by common stockholders (Ke) is 21 percent, what is the price of the common stock?
Omni Telecom is trying to decide whether to increase its cash dividend immediately or use the funds to increase its future growth rate. P0 = D1 Ke − g P0 = Price of the stock today D1 = Dividend at the end of the first year D1 = D0 × (1 + g) D0 = Dividend today Ke = Required rate of return g = Constant growth rate in dividends D0 is currently $2.90, Ke is 9 percent, and...
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