Question
Two companies, A and B, are in the same risk class. Company A pays a constant dividend of $4 per year and is selling in
Two companies, A and B, are in the same risk class. Company A pays a constant dividend of $4 per year
and is selling in the market for $35 per share. Company B just paid a dividend of $3.25 per share. If its
dividends are growing at a constant rate of 8 percent per year, what is the market price of B?
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Personal Financial Planning
Authors: Randy Billingsley, Lawrence J. Gitman, Michael D. Joehnk
14th edition
978-1305887725, 1305887727, 1305636619, 978-1305636613
