Question

ABC, Inc. is expected to pay dividends of $4.28 each year infinitely. If the required rate...

ABC, Inc. is expected to pay dividends of $4.28 each year infinitely. If the required rate on the stock is 10.76%, what is today's price of the stock?

Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box.

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Answer #1

Current value=annual dividend/required rate of return

=4.28/0.1076

which is equal to

=39.78(Approx).

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