Question

Cox Footwear pays a constant annual dividend. Last year, the dividend yield was 3.2 percent when the stock was selling for $35a share. What is the current price of the stock if the current dividend yield is 2.9 percent?a $18.92 b $38.62 c $25.20 d $26.87 e $27.40

Answer 1

Answer:

The current price of the stock is b. $38.62

Explanation:

Hi, in order to find the current price of the stock, first we need to find the amount paid as a constant dividend, the formula is as follows.

$DivYield=\frac{Dividend}{Price}$

So, things should look like this

$0.032=\frac{Dividend}{35}$

$Dividend=0.032*35=1.12$

So the amount of constant dividend tha this company is paying is $1.12/share

Now we can find the current price using the same equation and solving for "Price",

$0.029=\frac{1.12}{Price}$

$Price=\frac{1.12}{0.029} =38.62$

Therefore, the current price of the stock is $38.62, that would be option b.

Best of luck: