contestada

Cape Corp. will pay a dividend of $4.50 next year. The company has stated that it will maintain a constant growth rate of 5.25 percent a year forever. a. If you want a return of 18 percent, how much will you pay for the stock

Respuesta :

Tundexi

Answer:

a. $35.29

b. $78.26

Explanation:

Question b. Current stock price if return is 11%

a. Current stock Price (P0) = Next year dividend / (Ke - Growth)

If return is = 18%

Current stock Price = 4.5 / (0.18 - 0.0525 = $35.29

b. Current stock Price (P0) = Next year dividend / (Ke - Growth)

If return is = 11%

Current stock Price = 4.5 / (0.11 - 0.0525) = $78.26

Otras preguntas