#16. A stock is expected to pay $ 1.45 per share every year indefinitely and the...
#16. A stock is expected to pay $ 1.45 per share every year indefinitely and the equity cost of capital for the company is 7.2%. What price would an investor be expected to pay per share ten years in the future?
Homework Answers
Current value=Annual dividend/equity cost of capital
=1.45/0.072
=$20.14(Approx).
Hence since there is no growth;P10 would be equal to=Current price
=$20.14(Approx).
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