You are given the following data Required return 10 Present dividend $1 Growth rate 5 a) What is the value of the stock b) If the growth rate increases to 6 percent and the dividend remains $1, what is the value of the stock c) If the required return declines to 9 percent and the dividend remains $...

According to the dividendgrowth model V D 0 1 g k g ...

You are given the following data: Required return ................10% Present dividend .................$1 Growth rate ......................5% a) What

Question:

You are given the following data:
Required return ................10%
Present .................$1
Growth rate ......................5%
a) What is the value of the stock?
b) If the growth rate increases to 6 percent and the remains $1, what is the value of the stock?
c) If the required return declines to 9 percent and the remains $1, what is the value of the stock? If the stock is selling for $20, what does that imply?
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...