Ask Question
19 April, 12:42

Nyeil is a consumer products firm that is growing at a constant rate of 6.5 percent. The firm's last dividend was R3.36. If the required rate of return is 18 percent, what is the market value of this stock if dividends grow at the same rate as the firm?

+2
Answers (1)
  1. 19 April, 14:24
    0
    31.12

    Explanation:

    Given that,

    Growing at a constant rate = 6.5%

    Firm's last dividend, R = 3.36

    Required rate of return = 18%

    Expected dividend next year = 3.36 * (1 + 6.5%)

    = 3.5784

    Market value of stock:

    = Expected dividend next year : (required return - growth rate)

    = 3.5784 : (0.18-0.065)

    = 31.11652

    = 31.12
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Nyeil is a consumer products firm that is growing at a constant rate of 6.5 percent. The firm's last dividend was R3.36. If the required ...” 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