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Rhea owns shares in Riko Corp. Currently, the market price of the stock is $36.34. The company expects to grow at a constant rate of
Rhea owns shares in Riko Corp. Currently, the market price of the stock is $36.34. The company expects to grow at a constant rate of 6 percent for the foreseeable future. Its last dividend was worth $3.25. Rhea's required rate of return for such stocks is 16 percent. She wants to find out whether she should sell her shares or add to her holdings.
Calculate the value of this stock and advise Rhea on what she should do.
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