Ask Question
15 April, 15:48

is expected to pay a dividend of $2.60 and $2.24 over the next two years, respectively. After that, the company is expected to increase its annual dividend at 2.8 percent. What is the stock price today if the required return is 10.2 percent?

+1
Answers (1)
  1. 15 April, 16:23
    0
    Answer: The stock prices for today are $35.14 and $30.27

    Explanation:

    Stock Price (P) = D1/{r-g}

    D1 = $2.6

    D2 = $2.24

    r = 10.2%

    g = 2.8%

    P1 = 2.6 / (0.102 - 0.028)

    P1 = 2.6/0.074

    P1 = $35.14

    P2 = 2.24 / (0.102 - 0.028)

    P2 = 2.24/0.074

    P2 = $30.27
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “is expected to pay a dividend of $2.60 and $2.24 over the next two years, respectively. After that, the company is expected to increase its ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers