Red, Inc., Yellow Corp., and Blue Company each will pay a dividend of $1.40 next year....

Red, Inc., Yellow Corp., and Blue Company each will pay a dividend of $1.40 next year. The growth rate in dividends for all three companies is 4 percent. The required return for each company's stock is 9.00 percent, 12.50 percent, and 15.10 percent, respectively.

What is the stock price for Yellow Corp.?

Expert Solution

Stock price for Yellow Corp. = D1 / (r - g)

Stock price for Yellow Corp. = $1.40 / (0.1250 - 0.04)

Stock price for Yellow Corp. = $16.47

jeff jeffy answered 2 years ago

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