Question

Using the one-period valuation model, assuming a year-end dividend of $0.11, an expected stock sales price of $60, and a required rate of return of 10%, the current price of the stock would be

Answer 1

Solution:

The most common tool used to measure the valuation of the stock is the ratio of price to earnings. It's easy to access, and the data is readily accessible. The P / E ratio is determined by measuring the price of the stock by the sum of its 12-month trailing profits.

Given,

Dividend of $0.11

Expected stock sales price of $60

RRR 10%

The current price of the stock would be : 60 * 0.10 * 0.11 = 66