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wesen corp. will pay a dividend of $3.14 next year. the company has stated that it will maintain a constant growth rate of 4.5 percent a year forever. if you want a return of 12 percent, how much will you pay for the stock? what would the price be at a required return of 8%? what does this tell you about the relationship between the required return and the stock price?

Sagot :

Wesen corp. will pay a dividend of $3.14 next year. the company has stated that it will maintain a constant growth rate of 4.5 percent a year forever If you want a 12% return :P0 = $41.87,  8% return P0 = $89.71.

P0 = D1 / 12 for a return of 12%. (R-g)

P0 = 3.14 / (.12-.045) (.12-.045)

P0 = $41.87

P0 = 3.14 / (.08-.045) P0 equals $89.71 if you desire an 8% return. Growth rates are the changes in a particular variable's percentage over a given period of time. Growth rates can be either positive or negative depending on whether the variable's size is changing over time or staying the same. When used in the aforementioned context, the term "company" can be loosely defined as a group of individuals who have voluntarily joined forces in order to do business and divide the profits obtained therefrom. Indian law offers two primary organizational structures for these associations: "partnership" and "company."

Learn more about growth rate here :

https://brainly.com/question/13870574

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