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Sanford common stock is expected to pay $1.50 in dividends next​ year, and the market price...

Sanford common stock is expected to pay $1.50 in dividends next​ year, and the market price is projected to be $52.35 per share by​year-end. If investors require a rate of return of 13 percent, what is the current value of the​ stock?

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Expert Solution

Expected return = (Price at Y1 - Price at Y0)+Dividend/ Price at Y0)

Lets assume Price Y0 = X

Divindend = $1.5

Price at Y1 = $52.35

0.13 = (52.35-x)+1.5/x

0.13x = 52.35 - X+1.5

1.13x = 52.35+1.5

1.13x = 53.85

x = $47.6549

jeff jeffy answered 2 years ago
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