Stock Valuation. Alexander Corp. will pay a dividend of $2.72 next year. The company has stated that it will maintain a constant growth rate of 4.5 percent a year forever. If you want a return of 12 percent, how much will you pay for the stock? What if you want a return of 8 percent? What does this tell you about the relationship between the required return and the stock price?

The current price of the stock: $36.27.

Price of the stock at 8% will be $77.71.

Only need this question answered: (True or False) Refer to the above question. The relationship between the required return and the stock price. All else held constant, a higher required return means that the stock will sell for a lower price.