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Suppose DeepMind Inc. will pay $1.50 per share in dividends next year. The require return on the stock is 10% and its dividends will grow
Suppose DeepMind Inc. will pay $1.50 per share in dividends next year. The require return on the stock is 10% and its dividends will grow by 2% per year indefinitely. Under which of the following scenarios would you be willing to pay more than $18.75 today?
A) All else being equal, the required return is more than 10%
B) All else being equal, the dividend next year will be $1.20.
C) All else being equal, the growth rate of the dividends is greater than 2%.
D) You would be willing under both (A) and (C).
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