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Whats the answer of (b)? a) Suppose company A currently pays the total annual dividend of $2. on its common stock in a single annual
Whats the answer of (b)?
a) Suppose company A currently pays the total annual dividend of \$2. on its common stock in a single annual insta Ilment, and management plans on raising this dividend by 5 percent per vear indefinitely, If the required return on this stock is 10 percent, what is the current share price? P0=rgD0(1+g)=0.10.052(1+0.05)=$42 (b) Now suppose the company above actually pays its annual dividend in equal quarterly installments; thus, the co mpany has lust paid a dividend of $0.5 per share, as it has for the prevous three quarters. What is the value for th e current share price nowStep by Step Solution
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