Answered

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A+stock+is+expected+to+pay+a+dividend+of+$0.75+at+the+end+of+the+year.+the+required+rate+of+return+is+r+s+=+10.5%,+and+the+expected+constant+growth+rate+is+g+=+6.4%.+what+is+the+stock's+current+price?

Sagot :

The stocks current price is $18.29.

What is Dividend Growth Model?

The discounted cash flow method of company valuation serves as the foundation for the dividend growth model. We need to know the stock's dividends' constant growth rate in order to apply this approach.

The dividend growth model can be used to determine the price using the formula below:

anticipated dividend / share price (required return - dividend growth rate)

Share price equals 0.75 / (10.5% - 6.4%)

price = 18.29 per share.

Question:

A stock is expected to pay a dividend of $0.75 at the end of the year. The required rate of return is r s = 10.5%, and the expected constant growth rate is g = 6.4%. What is the stocks current price?

a. $17.84

b. $17.39

c. $19.22

d. $18.29

e. $18.75

To learn more about share price  click on the link below:

https://brainly.com/question/25775946

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