Question

The RLX Company just paid a dividend of $3.20 per share on its stock. The dividends are expected to grow at a constant rate of 4 percent per year indefinitely. Investors require a return of 10.5 percent on the company's stock.

Answer 1

Based on the dividend paid, the dividend growth rate, and the required return, the price of the stock is $51.20

What is the price of the stock?

This can be solved by the Gordon Growth Model:

Price of stock = Next dividend / (Required return - growth rate)

Solving gives:

= (3.20 x 1.04) / (0.105 - 0.04)

= 3.328 / 0.065

= $51.20

Question is:

Find the price of the stock

Find out more on the Gordon Growth Model at brainly.com/question/18760464

#SPJ1