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17 December, 12:39

Wesen Corp. will pay a dividend of $4.00 next year. The company has stated that it will maintain a constant growth rate of 5 percent a year forever. If you want a return of 17 percent, how much will you pay for the stock? (Do not round intermediate calculations and round your answer to 2 decimal places, e. g., 32.16.) Current stock price $ If you want a return of 11 percent, how much will you pay for the stock? (Do not round intermediate calculations and round your answer to 2 decimal places, e. g., 32.16.) Current stock price $

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  1. 17 December, 13:05
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    IF we want return of 17%

    R=17

    G = 5%

    D = 4

    Price = 4*1.05/0.17-0.05=$35

    IF we want return of 11%

    R=11

    G = 5%

    D = 4

    Price = 4*1.05/0.11-0.05=$70
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