Find the price for a stock given that the next dividend is $2.38 per share, the...

Find the price for a stock given that the next dividend is $2.38 per share, the required return is 9.6%, and the growth rate in dividends is 1.3% per year.

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Expert Solution

Ans $ 28.67

P0 =	Price of Share
D1 =	Current Dividend
Ke =	Cost of Equity
g =	growth rate

P0 =	D1 / (Ke - g)
P0 =	2.38 / (9.6%- 1.3%)
P0 =	28.67

jeff jeffy answered 2 years ago

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