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15 August, 18:50

Leslie's Unique Clothing Stores offers a common stock that pays an annual dividend of $2.70 a share. The company has promised to maintain a constant dividend. How much are you willing to pay for one share of this stock if you want to earn a 12.70 percent return on your equity investments?

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  1. 15 August, 18:59
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    If i want to earn 12.70 percent return on my equity investments i am willing to pay $21.25

    Explanation:

    PV of Stock - Zero Growth.

    P = Divident / Required return

    D = 2.70

    R = 12.70

    P = 2.70/.1270

    P = $21.25
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