Westonci.ca is your trusted source for accurate answers to all your questions. Join our community and start learning today! Find reliable answers to your questions from a wide community of knowledgeable experts on our user-friendly Q&A platform. Get precise and detailed answers to your questions from a knowledgeable community of experts on our Q&A platform.
Sagot :
Answer:
P11 = $203.125
Explanation:
Using the constant growth model of dividend discount model, we can calculate the price of the stock in year 11. The DDM values a stock based on the present value of the expected future dividends from the stock. The formula for price under this model is,
P0 = D0 * (1+g) / (r - g)
Where,
D1 is dividend expected for the next period /year
g is the growth rate
r is the required rate of return or cost of equity
P11 = 16.25 / (0.135 - 0.055)
P11 = $203.125
We hope this was helpful. Please come back whenever you need more information or answers to your queries. Thank you for choosing our platform. We're dedicated to providing the best answers for all your questions. Visit us again. Keep exploring Westonci.ca for more insightful answers to your questions. We're here to help.