A company just paid a dividend of $1.25, and the dividends are expected to grow at...

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Question

A company just paid a dividend of $1.25, and the dividends are expected to grow at...

A company just paid a dividend of $1.25, and the dividends are expected to grow at a constant rate of 5.5% for very long time in the future. If the required return of the investors is 10.75%, what is the price of this company’s stock?

		$20.90
		$60.28
		$41.35
		$25.12
		$31.32

business finance

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Answer 1

Answer #1

Current price=D1/(Required return-Growth rate)

=(1.25*1.055)/(0.1075-0.055)

=$25.12(Approx).

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Answer 2

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A company just paid a dividend of $1.25, and the dividends are expected to grow at...

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