The stock in Up-Towne Movers is selling for $45.80 per share. Investors have a required return of 10.8 percent and expec...
The stock in Up-Towne Movers is selling for $45.80 per share. Investors have a required return of 10.8 percent and expect the dividends to grow at 4.2 percent indefinitely. What was the dividend the company just paid?
Homework Answers
Required return=(D1/Current price)+Growth rate
0.108=(D1/45.8)+0.042
D1=(0.108-0.042)*45.8
=$3.0228
Hence dividend just paid=D1*Present value of discounting factor(rate%,time period)
=$3.0228/1.042
=$2.90(Approx).
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