A share of Lash Inc.'s common stock just paid a dividend of $2.38. If the expected...

A share of Lash Inc.'s common stock just paid a dividend of $2.38. If the expected long-run growth rate for this stock is 4%, and if investors' required rate of return is 11%, what is the stock price?

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Expert Solution

According to dividend discount model price of share will be equal to

= D1/(k-g)

Where D1 is year 1 dividend = 2.38 + 4% = 2.4752

K is cost of equity = 11%

G is growth = 4%

Price = 2.4752/(0.11-0.04) = 35.36

jeff jeffy answered 2 years ago

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