Question

Dropshot Corporation stock currently sells for $64.53 per share. The market requires a return of 8 percent on the firm’s stock. If the company maintains a constant 5.5 percent growth rate in dividends, what was the most recent dividend per share paid on the stock?

Answer 1

Answer:

D=$1.52914

The most recent dividend per share paid on the stock is $1.52914.

Explanation:

Formula we are going to use is:

$P=D*\frac{1+g}{r-g}$

Where:

P is the current selling price

D is he recent dividend per share

g is the growth rate

r is the rate of return

Above formula will become:

$D=\frac{P*(r-g)}{1+g} \\D=\frac{\ 64.53*(0.08-0.055)}{1+0.055}$

D=$1.52914

The most recent dividend per share paid on the stock is $1.52914.