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Altria stock (Ticker symbol MO, earlier called Phillip Morris) trades at a price of $51.38. Its next annual dividend will be $3.4 and it has
Altria stock (Ticker symbol MO, earlier called Phillip Morris) trades at a price of $51.38. Its next annual dividend will be $3.4 and it has an expected growth of 5% a year. Assuming a required return of 10% on MO stock, what should the price of MO be today? (ii) What growth rate in dividends rationalizes the current price of $51.38? In other words, what growth rate gives the market price given the required return of 10%
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