Spacefood Products will pay a dividend of $2.50 per share this year. It is expected that...
Spacefood Products will pay a dividend of $2.50 per share this year. It is expected that this dividend will grow by 3% per year each year in the future. What will be the current value of a single share of Spacefood's stock if the firm equity cost of capital is 9%?
a. $37.50
b. $41.67
c. $27.09
d. $29.17
Homework Answers
Current price=D1/( equity cost of capital-Growth rate)
=2.5/(0.09-0.03)
which is equal to
=$41.67(Approx).
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