Ask Question
6 June, 10:47

dividend of $2.82 per share next year. the company pledges to increase its dividend by 3 percent per year indefinitely. if you require a return of 10 percent on your investment, how much will you pay for the company's stock today

+5
Answers (1)
  1. 6 June, 11:03
    0
    The correct answer is $40.29

    Explanation:

    Price of stock (Po)

    D1 Dividend next year = $2.82

    r Required return = 10%

    g Growth rate = 3%

    Po = D1/r-g

    Po = $2.82 / 10%-3% = $40.285 = $40.29

    The price for the stock today is $40.29
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “dividend of $2.82 per share next year. the company pledges to increase its dividend by 3 percent per year indefinitely. if you require a ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers