Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Company XYZ has just paid a dividend of $1.50 per share. Because of its growth potential, its dividend is forecast to grow at a rate

Company XYZ has just paid a dividend of $1.50 per share. Because of its growth potential, its dividend is forecast to grow at a rate of 4 percent per year indefinitely. If the company's appropriate cost of capital (given its risk) is 13 percent, what was XYZ'sshare price immediately after it paid its $1.50 dividend, i.e the stock price right after the ex-dividend date?


Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Corporate Finance Core Principles And Applications

Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Bradford Jordan

6th Edition

1260571122, 978-1260571127

More Books

Students also viewed these Accounting questions