10-6) Oxygen Optimization stock has an expected annual return of 16.13 percent. The stock is expected...

10-6)

Oxygen Optimization stock has an expected annual return of 16.13 percent. The stock is expected to be priced at 93.93 dollars per share in 1 year and the stock currently has an expected dividend yield of 6.82 percent. What is the current price of the stock?

Expert Solution

Stock price today = $86.4

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Dividend yield = dividend / share price

0.0682 = dividend/93.93

Dividend net year = $6.41

Stock price next year = 93.93

Expected return = 16.13%

Current price of stock = discounted value of stock price and dividend

= (93.93 + 6.41)/(1+ 0.1613)

= 100.34/1.1613

= $86.4

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jeff jeffy answered 6 months ago

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