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Assume (for ease of calculations) that Merck pays its dividend annually. It just paid its annual dividend of 2.28 and announced plans to grow that
Assume (for ease of calculations) that Merck pays its dividend annually. It just paid its annual dividend of 2.28 and announced plans to grow that dividend by 2.13% for next year. This annual growth rate is expected to persist forever. Your discount rate (required return) to be willing to buy Merck stock is 8.69%. What price should you be willing to pay today for a share of Merck stock? Answer should include two digits to the right of the decimal point (i.e. it includes cents, but not fractions of cents).
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