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CalPer Corporation's stock has a current market price per share of $57.50. Given the level of risk the required rate of...

CalPer Corporation's stock has a current market price per share of $57.50. Given the level of risk the required rate of return of 10.25%. The dividend is expected to grow at a constant rate of 4.35% per year. What is the expected year-end dividend, D1?

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Answer #1

Po = D1 / (Ke - g)

$57.50 = D1 / (0.1025 - 0.0435)

D1 = $57.50 * 0.059

D1 = $3.3925

Expected year-end dividend = $3.3925

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