In: Finance
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.
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 |