Question
A stock is expected to pay a dividend per share (DPS) of $5 next year with a constant growth rate of 3% forever. If the
A stock is expected to pay a dividend per share (DPS) of $5 next year with a constant growth rate of 3% forever. If the cost of equity capital is 9% and the cost of capital for the whole firm is 7%, what is the value of this stock?
| a. | $83.33 | |
| b. | $125 | |
| c. | $55.56 | |
| d. | $71.43 | |
| e. | none of the above |
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Fundamentals Of Corporate Finance
Authors: Richard A. Brealey, Marcus, Alan J, Myers, Stewart C.
2nd Edition
0070074860, 9780070074866
