It will cost $3,500 to acquire a small hot dog cart. cart sales are expected to be $1,500 a year for three years. after the thre
1 answer:
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Answer:
current share price = $5.40
so correct option is C. $5.40
Explanation:
given data
dividends paid = 15 years
pay = $6 per share
increase = 4%
to find out
current share price
solution
we know that Value after year 15 will be = ( D15 × Growth rate) ÷ (required return - growth rate) ......................1
put here value
Value after year 15 =
Value after year 15 = $52
so here current share price will be
current share price = Future dividends × Present value of discounting factor
current share price =
current share price = $5.40
so correct option is C. $5.40