45) Using the Constant Growth (Gordon) Model, what should be the current price of a stock...
45) Using the Constant Growth (Gordon) Model, what should be the current price of a stock if the next expected dividend is $5, the stock has a required rate of return of 20%, and a constant dividend growth rate of 6%?
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A) $19.23 |
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B) $25.00 |
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C) $35.71 |
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D) $37.86 |
Homework Answers
C) $35.71
Current price = D1 / (rs - g)
Current price = $5 / (0.20 - 0.06)
Current price = $35.71
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