How much are you willing to pay for one share of stock if the company just paid an annual dividend of $1.03, the dividends incre
ase by 3 percent annually, and you require a rate of return of 15 percent?
a.8.69%
b.8.54%
c.9.04%
d.9.22%
e.9.45%
1 answer:
Answer:
b.8.54%
Explanation:
Use Dividend Growth model to calculate the rate
Dividend =D1 = $1.03
Rate of return = k = 15%
Growth rate = g = 3%
Formula
Cost of Capital = D1 / k-g
Cost of Capital = 1.03 / 15%-3%
Cost of Capital = 1.03 / 12%
Cost of Capital = 8.58%
The closest answer is 8.54%, as no option matches with the answer.
You might be interested in
I think its A cuz its about good or bad credit all the time
At least 3 days per week with sufficient reps and sets.
I believe that the correct answer is b
Answer:
the day is good
Explanation:
im not dead i need a crown please
Answer:
Stop assuming then....hehe haha don't know ur previous ques and too lazy to open it and even too lazy to read it full sorry
