hailey corporation pays a constant $13.50 dividend on its stock. the company will maintain this dividend for the next 8 years an

Question

10 months ago

13

d will then cease paying dividends forever. if the required return on this stock is 11 percent, what is the current share price?

1 answer:

Elena-2011 [213] · Answer 1 · 2024-05-19T11:10:40+03:00

The current share price is approximately $69.47

<h3>What is the Share price?</h3>

The cost of one share of a group of marketable equity shares of a firm is known as the share price.
Simply put, the stock price is either the lowest possible price or the maximum price someone is ready to pay for the stock.
Analysts estimate the behavior of asset prices, especially share prices in stock markets, using random walk approaches in economics and financial theory.
The share price method is predicated on the idea that investors behave logically and impartially and constantly appraise the value of an asset based on expectations for the future.
In such a scenario, the price is influenced by all available information and is only subject to alteration in response to the release of new information.

Share price = $13.5 × Present value of annuity factor(11%,8)

Share price =$13.5 × 5.146122761

Share price =$69.47(Approx).

Hence, the current share price is approximately $69.47

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