Question
You have been considering an investment in a particular company's stock for a long time. The stock is currently selling for $41.00. The company has
You have been considering an investment in a particular company's stock for a long time. The stock is currently selling for $41.00. The company has been growing its dividend at a 5% rate of growth and the required return is 15%. The company plans to pay a 4.00 dividend next year. Should you buy this stock at its current price?
Select one:
a. No
b. Yes
c. The correct answer cannot be derived from the information given
d. The calculated yield to maturity indicates that the price and the value are the same. Therefore it is not a bargain nor is it overpriced relative to its value. The return is adequate for the parameters given.
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