Swifty Corporation has a current stock price of $30.44. The company paid $1.08 in dividends this...

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Question

Swifty Corporation has a current stock price of $30.44. The company paid $1.08 in dividends this year and dividends are expec

business finance

Answer 1

Answer #1

Given Stock Price is 30.44 which is irrelavant for the calculation.

Paid $1.08 dividends , required return of 12% , and growth rate of 8%.

Formula for stock price is = Dividend paid/ (required return rate - growth rate )

= 1.08/ (12%-8%) = 1.08/ 4% = 27

next years dividend would be 27 X 8% = 2.16

Adding 27 + 2.16 will give you the result of 29.16.

Answer 2

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