You want to buy Apple stock, they just issued a dividend lastyear of $2.40 and...

You want to buy Apple stock, they just issued a dividend last year of $2.40 and expect their dividend to grow by 5%. You expect to earn 10% on Apple stock and Apple anticipates to continue its dividend forever. What is the present value of Apple’s stock?

Expert Solution

D1 = 2.40 * (1+0.05) = 2.52

Present Value of Stock = D1 / Cost of Equity - G

= 2.52 / 0.10 - 0.05

= $50.4

jeff jeffy answered 2 years ago

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