A stock just paid a dividend of D0 = $1.50. The required rate of return is...

Question

Question

A stock just paid a dividend of D0 = $1.50. The required rate of return is...

A stock just paid a dividend of D₀ = $1.50. The required rate of return is r_s = 8.0%, and the constant growth rate is g = 4.0%. What is the current stock price?

Select the correct answer.

a. $39.27

b. $39.00

c. $38.19

d. $38.46

e. $38.73

business accounting

Add a comment Improve this question Transcribed image text

Answer 1

Answer #1

The correct answer is B. i.e. $39

Do = $1.50 ke: 811 Q = hy: Current Stock Price ie Po = ?? Po = D = = 156 (1.04) - Ke-g Do (Itg) = 1.56 0.04 ke-g 0.08-0.04 =)

Add a comment

Answer 2

Similar Homework Help Questions

A stock just paid a dividend of D0 = $1.50. The required rate of return is...

A stock just paid a dividend of D0 = $1.50. The required rate of return is rs = 15.5%, and the constant growth rate is g = 4.0%. What is the current stock price? Select the correct answer. a. $12.38 b. $13.57 c. $11.19 d. $15.95 e. $14.76
A stock just paid a dividend of Do = $1.50. The required rate of return is...

A stock just paid a dividend of Do = $1.50. The required rate of return is rs=15.0%, and the constant growth rate is g=4.0%. What is the current stock price?
QUESTION 23 A share of common stock just paid a dividend (D0) of $1.50. If the...

QUESTION 23 A share of common stock just paid a dividend (D0) of $1.50. If the expected long-run growth rate for this stock is 5%, and if investors' required rate of return is 11.5%, what is the current stock price? 1. $17.57 2. $24.23 3. $17.13 4. $18.01 5. $16.28

. Mike works for a prominent technology company. His company just paid a $1.50 dividend per...

. Mike works for a prominent technology company. His company just paid a $1.50 dividend per share. The required return for his company’s stock is 12%. A. If the dividend that Mike’s company just paid is a perpetual dividend, what is the price of the stock today? (Hint: Zero-growth Dividend Stock) B.(QUESTION 22) Mike’s company has decided to increase the company’s dividend by 6% forever, on an annual basis starting with the next dividend. If this is the case, what...
Super Carpeting Inc. just paid a dividend ( D0 ) of $2.16, and its dividend is...

Super Carpeting Inc. just paid a dividend ( D0 ) of $2.16, and its dividend is expected to grow at a constant rate (g) of 3.15% per year. If the required return ( rs ) on Super’s stock is 7.88%, then the intrinsic, or theoretical market, value of Super’s shares is per share. Which of the following statements is true about the constant growth model? When using a constant growth model to analyze a stock, if an increase in the...
National Advertising just paid a dividend of D0 = $0.75 per share, and that dividend is...

National Advertising just paid a dividend of D0 = $0.75 per share, and that dividend is expected to grow at a constant rate of 6.50% per year in the future. The company's beta is 0.8, the required return on the market is 10.50%, and the risk-free rate is 4.50%. What is the company's current stock price? Select the correct answer. a. $29.21 b. $28.53 c. $28.87 d. $29.55 e. $28.19

National Advertising just paid a dividend of D0 = $0.75 per share, and that dividend is...

National Advertising just paid a dividend of D0 = $0.75 per share, and that dividend is expected to grow at a constant rate of 6.50% per year in the future. The company's beta is 0.9, the required return on the market is 10.50%, and the risk-free rate is 4.50%. What is the company's current stock price? Select the correct answer. a. $23.04 b. $22.14 c. $22.59 d. $23.49 e. $21.69
A stock just paid a dividend of $1.3. The required rate of return is 11.6%, and...

A stock just paid a dividend of $1.3. The required rate of return is 11.6%, and the constant growth rate is 3%. What is the current stock price? Enter with two decimal places of precision (dollar and cents). Show Work!
El Taco Tote just paid a dividend of D0 = $1.75 per share, and that dividend...

El Taco Tote just paid a dividend of D0 = $1.75 per share, and that dividend is expected to grow at a constant rate of 5.50% per year in the future. The company's beta is 1.50, the required return on the market is 9.50%, and the risk-free rate is 3.50%. What is the company's current stock price?

1.Golf World has a constant dividend growth rate of 10% and has just paid a dividend (D0) of $5.00. If the required rate...

1.Golf World has a constant dividend growth rate of 10% and has just paid a dividend (D0) of $5.00. If the required rate of return is 15%, what will the stock sell for one year from now? A) $90.00 B) $95.50 C) $ 100.00 D) $121.00 2.The dividend yield on AAA’s common stock is 5%. The company just paid a $4 dividend (D0), which will be $4.40 next year. The dividend growth rate (g) is expected to remain constant at...

A stock just paid a dividend of D0 = $1.50. The required rate of return is...

Homework Answers