Question
In: Finance
Marmara MIS Company has an expected growth rate at 0%. Each share of stock just received an annual 5 TL dividend per share. If the required return on the stock is 15%, what is the value of the common stock?
Marmara MIS Company has an expected growth rate at 0%. Each share of stock just received an annual 5 TL dividend per share. If the required return on the stock is 15%, what is the value of the common stock?
Solutions
Expert Solution
As per the Gordon Growth Model:
where, Po = Value of stock today
Do = Current annual dividend per share =
r = Required annual rate of return
g = Annual dividend growth rate
In the given question we are given the following,
Growth rate (g) = 0%
Current annual dividend per share (Do) = 5 TL
Required rate of return (r) = 15%
Value of stock today (Po) = ?
So,
P0 = 33.33 TL
Nabeel answered 2 years agoRelated Solutions
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