Please type the answer. not excel or photo. thank you!
Oxile, Co. will maintain a constant $6 dividend on its stock for 14 years and will then cease paying dividends forever. What is the current share price if the required return on this stock is 12%.
Current Share price = Present value of future dividends
= Present value of annuity with rate of 12% and payment of 6 for 14 years
= payment per period * [1-(1+i)^-n]/i
where
i = interest rate per period
n = number of periods
=>
Price = 6 * [1-(1+12%)^-14]/0.12
= 39.77
Please type the answer. not excel or photo. thank you! Oxile, Co. will maintain a constant...