A stock is expected to pay a year-end dividend of $1.00, i.e., D 1 = $1.00. The dividend is expected to decline at a rate
A stock is expected to pay a year-end dividend of $1.00, i.e., D1 = $1.00. The dividend is expected to decline at a rate of 5% a year forever (g = -5%). If the company is in equilibrium and its expected and required rate of return is 15%. What is the stock price today?
| $10 | ||
| $5 | ||
| $11.50 | ||
| $15 | ||
| $7 |
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Authors: Alexander Lipton, Andrew Rennie
1st Edition
0199546789, 978-0199546787
