Question
In: Finance
Assume that a company just paid a dividend of $2 per share. The expected growth rate...
Assume that a company just paid a dividend of $2 per share. The expected growth rate in the dividend is a constant 10%. If your required rate of return for the stock is 15%, what is the value of the stock to you today?
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Expert Solution
| Stock price = D1 / r - g |
| Where, |
| D1 = Expected Dividend =$2*1.10 =2.20 |
| r= required rate of return |
| g= growth rate |
| =2.2/0.15-0.1 |
| = $44 |
jeff jeffy answered 3 years agoRelated Solutions
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