Answered

Westonci.ca connects you with experts who provide insightful answers to your questions. Join us today and start learning! Connect with a community of professionals ready to help you find accurate solutions to your questions quickly and efficiently. Discover detailed answers to your questions from a wide network of experts on our comprehensive Q&A platform.

the rlx company just paid a dividend of $3.20 per share on its stock. the dividends are expected to grow at a constant rate of 4 percent per year indefinitely. investors require a return of 10.5 percent on the company's stock. a. what is the current stock price? (do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. what will the stock price be in 3 years? (do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. what will the stock price be in 15 years? (do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Sagot :

The present stock price is $51.23.

The stock price in 3 years will be $57.63

The stock price in 15 years will be $92.27

The present value formula PV = FV/(1+i)^n states that perform price is similar to the future price divided by the sum of 1 plus interest rate per period raised to the number of time periods.

Dividend (D0) = $3.20

Growth rate (g) = 4%

Required return (r) = 10.5%

The formula to find the current stock price is:

Current stock price = [tex]\frac{D0(1 + g)}{r - g}[/tex]

Current stock price = $3.20 x ( 1 + 4%) : (10.5% - 4%)

Current stock price = $3.20 x (1,04) : (0.105 - 0.04)

Current stock price = $3.33 : 0.065 = $51.23

The stock price be in 3 years is :

$51.23 × (1.04)³= $51.23 × 1.125 = $57.63

The stock price be in 15 years is :

$51.23 × (1.04)¹⁵ = $51.23 × 1.801 = $92.27

Learn more about The stock price at https://brainly.com/question/28097197?referrer=searchResults

#SPJ4

We appreciate your time. Please revisit us for more reliable answers to any questions you may have. We hope you found this helpful. Feel free to come back anytime for more accurate answers and updated information. We're glad you visited Westonci.ca. Return anytime for updated answers from our knowledgeable team.