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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 78 dollars next
You are a financial analyst and are comparing two stocks. For Stock A, you expect that it will pay a dividend of 78 dollars next year and you expect these dividends to grow at a rate of 3% per annum. The required return on this stock is 10%. 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. 558.33
b. 761.73
c. 1072.62
d. 1184.05
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