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Brickhouse is expected to pay a dividend of $3.00 and $2.40 over the next two years,...

Brickhouse is expected to pay a dividend of $3.00 and $2.40 over the next two years, respectively. After that, the company is expected to increase its annual dividend at 3.6 percent. What is the stock price today if the required return is 11 percent?

Multiple Choice

$27.26

$29.96

$31.91

$36.42

$34.19

Solutions

Expert Solution

Discount rate 11.0000%
Cash flows Year Discounted CF= cash flows/(1+rate)^year Cumulative cash flow
                               -   0                                            -                                           -  
                        3.000 1                                        2.70                                    2.70
                     32.432 1                                     29.22                                31.921

stock price today = 31.91

jeff jeffy answered 2 years ago
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