Nazindil Inc. pays an annual dividend of $2.10 per share and is expected to pay this...

Nazindil Inc. pays an annual dividend of $2.10 per share and is expected to pay this amount indefinitely. Which of the following would be closest to its share price if the firm's equity cost of capital is 9%?

Select one:

$29.16

$23.33

$14

$18.66

Solutions

Expert Solution

Solution :-

Annual Dividend = $2.10

Equity cost of capital = 9%

Nazindil inc. is expected to pay this amount of dividend indefinitely . So,

Share price =

=Annual dividend / equity cost of capital

= $2.10 / 9%

= $2.10 / 0.09

= $23.3333333

Or $ 23.33

So, share price is closest to $ 23.33

jeff jeffy answered 2 years ago

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