Question

santa klaus toys just paid a dividend of $2.10 per share. the required return is 11.5 percent and the perpetual dividend growth rate is 3.0 percent. what price should this stock sell for five years from today?

Answer 1

The value of stock after 5 years from today will be $29.48 considering the dividend paid and growth rate.

Given information:

Dividend per share = $2.10

Required rate of return = $11.5

Growth rate = 3% = 0.03

Dividend after 5 years = 2.10 (1+0.03) ^6 =$2.506

Value of stock= Dividend per share / (Required rate of return-growth rate)

Value of stock = 2.506/ (0.115-0.03) = $29.48

A stock is a colloquial phrase for any company's equity certificates. But at the other hand, a share alludes to a specific company's stock certificate. You become such a shareholder if you acquire shares of a particular corporation. There are two sorts of stocks: ordinary and preferred. The distinction is that whereas the owner of the former can exert right to vote in company decisions, the latter doesn't really. However, even before dividends are distributed to other shareholders, preferred shareholders have a lawful authority to a specific amount of dividend payouts.

Learn more about stocks here:

brainly.com/question/27385142

#SPJ4