Answered

Welcome to Westonci.ca, the place where your questions find answers from a community of knowledgeable experts. Discover comprehensive solutions to your questions from a wide network of experts on our user-friendly platform. Connect with a community of professionals ready to help you find accurate solutions to your questions quickly and efficiently.

Angelina's made two announcements concerning its common stock today. First, the company announced that its next annual dividend has been set at $2.20 a share. Secondly, the company announced that all future dividends will increase by 5% annually. What is the maximum amount you should pay to purchase a share of Angelina's stock if your goal is to earn a 10% rate of return

Sagot :

Answer:

44

Explanation:

according to the constant dividend growth model

price = d1 / (r - g)

d1 = next dividend to be paid

r = cost of equity

g = growth rate

2.2 / 0.1 - 0.05 = 44

We appreciate your time. Please come back anytime for the latest information and answers to your questions. We hope this was helpful. Please come back whenever you need more information or answers to your queries. Westonci.ca is committed to providing accurate answers. Come back soon for more trustworthy information.