What is the value of a share of ABC Inc. if they expect to pay a...

What is the value of a share of ABC Inc. if they expect to pay a $5 dividend next year and the dividends are expected to grow at a rate of 3.5%. Assume the investor's required rate of return is 9%.

Solutions

Expert Solution

Stock price = D1 / r - g

Where,
D1 = Expected Dividend
r= required rate of return
g= growth rate

=5/0.09-0.035

=90.91

jeff jeffy answered 1 year ago

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