Ask Question
BusinessBusiness
31 December, 06:41

MTB Industries currently pays an annual dividend of $1.50 per share, and it is expected that these dividend payments will continue indefinitely. If the firm's equity cost of capital is 12%, the value of a share of MTB stock is closest to:

+2
Answers (1)
  1. 31 December, 06:50
    0
    The value of MTB stock is closest to $12.50

    Explanation:

    The value of MTB stock is calculated using the below formula for the present of an annuity in perpetuity=dividend/expected rate of return

    The expected rate of return in this instance is the equity cost of capital

    Value of MTB stock=$1.50/12%

    Value of MTB stock=$12.5

    A rational investor a price for a stock today that reflects the future cash flows payable by a way of dividends payments promised by such stock considering the investor's rate of return as done above
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “MTB Industries currently pays an annual dividend of $1.50 per share, and it is expected that these dividend payments will continue ...” 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
You Might be Interested in
Most of the year, and most of the time, the movement of sediment and water (longshore current along the california coast is from
Answers (1)
Hamilton Company common stock is currently selling for $60 per share. The stock will pay a dividend of $4.35 next year.
Answers (1)
Your company is branching out into the developing world for the first time. You know that it could be challenging to use the firm's mail surveys in these countries. Among the relevant challenges, developing countries are commonly known to have: a.
Answers (1)
What is the yield to maturity of a eight -year, $ 10 comma 000 bond with a 4.5 % coupon rate and semiannual coupons if this bond is currently trading for a price of $ 8 comma 840 ?
Answers (1)
Organizing the second level of the Work Breakdown Structure by major design components facilitates rolling wave planning. True / False.
Answers (1)
New Questions in Business
A certificate of deposit will often result in a penalty for withdrawing funds before the maturity date. If the penalty involves two months of interest, what would be the amount for early withdrawal on a $20,000, 4 percent CD?
Answers (1)
Androscoggin Copper can grow at 5% per year for the indefinite future. It's selling at $100, and next year's dividend is $5.
Answers (1)
What are two types of businesses that would probably use a sole proprietorship as a form of business ownership?
Answers (1)
Which financial problems might cause a person to be considered a bad risk for a loan to purchase a home? Check all that apply.
Answers (2)
Companies can adapt their catalog revenue model online by replacing or supplementing their print catalogs with information on their Web sites. True False
Answers (1)
Home » Business » MTB Industries currently pays an annual dividend of $1.50 per share, and it is expected that these dividend payments will continue indefinitely. If the firm's equity cost of capital is 12%, the value of a share of MTB stock is closest to:
Sign Up Forgot Password?