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MENSA Int'l just paid a dividend of $1.25. Their growth rate in dividends is 10% and...

MENSA Int'l just paid a dividend of $1.25. Their growth rate in dividends is 10% and you require a rate of return of 10%, what is the value of this stock today?

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Answer #1

Value of this stock today = D0(1 + g) / (r - g)

Value of this stock today = $1.25(1.10) / (0.10 - 0.10)

Value of this stock today = $1.375 / 0

Value of this stock today = $0

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