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You are a financial analyst and are comparing two stocks. For Stock A, you expect that it will pay a dividend of 65 dollars next
You are a financial analyst and are comparing two stocks. For Stock A, you expect that it will pay a dividend of 65 dollars next year and you expect these dividends to grow at a rate of 3%. If the required return on the stock is 14%. For Stock B, you expect that it will pay constant dividends of 5 with a required return on Stock B of 12%. What is the difference in stock price? Calculate the difference as price of Stock A minus the price of Stock B.
a. 340.69
b. 436.55
c. 549.24
d. 631.97
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