Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The company will pay a dividend of $14 per share 10 years from today and it will increase the dividend by 6 percent per year.

The company will pay a dividend of $14 per share 10 years from today and it will increase the dividend by 6 percent per year. If the required return on this stock is 12 percent, what is the current share price? Round to 2 decimal places.

I keep getting $75.13 but it is marked wrong.

My work is as followed:

14 / (12%-6%) = 233.3333 (repeating)

233.3333 / (1 + 0.12) ^10

= $75.13

Any assistance would be greatly appreciated. Thanks!

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Intermediate Financial Management

Authors: Eugene BrighamPhillip Daves

1st Edition

0324594712, 9780324594713

More Books

Students also viewed these Finance questions