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ohaa [14]
3 years ago
15

Riverside Motors is expected to pay an annual dividend next year of $3.10 a share. Dividends are expected to increase by 1.85 pe

rcent annually. What is one share of this stock worth at a required rate of return of 15 percent
Business
1 answer:
Vilka [71]3 years ago
7 0

Answer: $23.57

Explanation:

We are going to use growth dividend discount model to solve the question where Do = Div/r - g

where Po = stock price

Div = Estimated dividend for following period

r = required rae of return

g = growth rate

Po = 3.10/0.15 - 0.0185

= $23.57

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