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.?

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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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