The current price of ADMs stock, P0, is $20, and the company is expected to pay a

Question:

The current price of ADM’s stock, P0, is $20, and the company is expected to pay a $2.20 next year. If the appropriate required rate of return for ADM’s stock is 15 percent, what should be the price of the stock in one year, P1? Assume that the company has achieved constant growth.

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...