We appreciate your visit to A stock just paid a dividend of 1 37 that is to say D0 1 37 The required rate of return is rs 14 15. This page offers clear insights and highlights the essential aspects of the topic. Our goal is to provide a helpful and engaging learning experience. Explore the content and find the answers you need!
Answer :
Final Answer:
The current price of the stock is $32.64.
Explanation:
To calculate the current price of the stock, we can use the Gordon Growth Model, also known as the Dividend Discount Model (DDM). The formula for the DDM is:
[tex]\[P0 = \frac{D0 \times (1 + g)}{rs - g}\][/tex]
Where:
P0 = Current stock price
D0 = Last dividend paid = $1.37
rs = Required rate of return = 14.15%
g = Constant annual growth rate in dividends = 4.37%
Plugging in the values:
[tex]\[P0 = \frac{1.37 \times (1 + 0.0437)}{0.1415 - 0.0437} = \frac{1.37 \times 1.0437}{0.0978} ≈ $32.64\][/tex]
So, the current price of the stock is approximately $32.64.
Learn more about stock
brainly.com/question/31940696
#SPJ11
Thanks for taking the time to read A stock just paid a dividend of 1 37 that is to say D0 1 37 The required rate of return is rs 14 15. We hope the insights shared have been valuable and enhanced your understanding of the topic. Don�t hesitate to browse our website for more informative and engaging content!
- Why do Businesses Exist Why does Starbucks Exist What Service does Starbucks Provide Really what is their product.
- The pattern of numbers below is an arithmetic sequence tex 14 24 34 44 54 ldots tex Which statement describes the recursive function used to..
- Morgan felt the need to streamline Edison Electric What changes did Morgan make.
Rewritten by : Barada
