Boehm Incorporated is expected to pay a $ 1.2 per share dividend at the end of the year (i.e.,D1). The dividend is expected to grow at a constant rate of 3 % a year. The required rate of return on the stock, r, is 13 %. What is the value per share of the company's stock? Round your answer to two decimal places.
Answer:
Required return = 13%
Expected Dividend (D1) = $1.20
Growth Rate (g) = 3%
Current Price per share (P0) = ??
Required return = D1 / P0 + g
0.13 = $1.20 / P0 + 0.03
0.10 = $1.20 / P0
P0 = $12.00
Boehm Incorporated is expected to pay a $ 1.2 per share dividend at the end of...