Question
QQQ Corporation has paid an annual dividend to its common stockholders of $2.00 per share for several years. Investment analyst Ms. R believes that the
QQQ Corporation has paid an annual dividend to its common stockholders of $2.00 per share for several years. Investment analyst Ms. R believes that the company managers will keep the per-share dividend at that same $2.00 annual level for many years into the future, such that she models her value estimate as a perpetuity. If she feels that a QQQ common stockholder should earn a 6% average annual rate of return, what price does she think a sensible buyer should be willing to pay for a share of the companys common stock? Hint: use the Basic Time Value of Money table attached to this quiz or a financial calculator.
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