Question
Assume Evco, Inc. has a current stock price of $46.76 and will pay a $1.95 dividend in one year; its equity cost of capital is
Assume Evco, Inc. has a current stock price of $46.76 and will pay a $1.95 dividend in one year; its equity cost of capital is 19%. What price must you expect Evco stock to sell for immediately after the firm pays the dividend in one year to justify its current price?
Step by Step Solution
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Step: 1
Growth rate can be calculated by using the formula Price at year 0 year 1 dividend rate grow...
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Fundamentals Of Corporate Finance
Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford
5th Global Edition
1292437154, 978-1292437156
