Header Motor Inc paid a $3.50 dividend last year. At constant growth rate of 5 %, what

Question:

Header Motor Inc paid a $3.50 last year. At constant growth rate of 5 %, what is the value of the if the investors require a 20% rate of return? Should you purchase this stock if it is selling for $26 a share? If you paid $26 for this stock, what would be your rate of return?

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...