Question
Gym just paid its annual dividend of $3.00 per share, and it is widely expected that the dividend will increase by 5% per year indefinitely.
Gym just paid its annual dividend of $3.00 per share, and it is widely expected that the dividend will increase by 5% per year indefinitely.
a) what price should the stock sell at? The discount rate is 15%
b) How would your answer change if the discount rate were only 12%? Why does the answer change?
Please show work. Thanks.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Real Estate Finance and Investments
Authors: William Brueggeman, Jeffrey Fisher
14th edition
73377333, 73377339, 978-0073377339
