Answered step by step
Verified Expert Solution
Question
00
1 Approved Answer
The stock of Robotic Atlanta Inc. is trading at $22.86 per share. In the past, the firm has paid a constant dividend (i.e., g=0 )
The stock of Robotic Atlanta Inc. is trading at \$22.86 per share. In the past, the firm has paid a constant dividend (i.e., g=0 ) of $4.85 per share and it has just paid an annual dividend (i.e., DO = 4.85 ). However, the company will announce today new investments that the market did not know about. It is expected that with these new investments, the dividends will grow at 5.4% forever. Assuming that the discount rate remains the same, what will be the price of the stock after the announcement? (Round your answer to 2 decimal places and record your answer without dollar sign or commas). Your
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started