Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

9. Wislow Brothers's common stock sells for $28.20 a share. The market rate of return on this stock is 15 percent. Its common stock pays

image text in transcribed 9. Wislow Brothers's common stock sells for $28.20 a share. The market rate of return on this stock is 15 percent. Its common stock pays an annual dividend that increases by 11.3 percent annually forever. What is the closest to the amount its dividend just paid? A. $0.94 B. $7.42 C. $6.67 D. $1.04 E. $2.87 10. XanEx is a new firm that will pay an annual dividend of $1 a share next year. The firm plans to increase its dividend by 20 percent a year from then on for the following two years. Then the annual dividend growth rate forever will be 5 percent lower than the constant required rate of return. If the required rate of return is 10.25 percent, what is the closest to what one share of this stock is worth today? A. $24.04 B. $25.59 C. $30.87 D. $34.21 E. $28.50

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Research In Finance

Authors: John W. Kensinger

1st Edition

0857245414, 978-0857245410

More Books

Students also viewed these Finance questions