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AfilCa [17]
4 years ago
7

Thomas Brothers is expected to pay a $0 50 per share dividend at the end of the year (i.s., D1=$0.50). The dividend is expected

to grow at a constant rate of 7% a year. The required rate of return on the stock, rs, is 15%. What is the stock’s current value per share?
Business
1 answer:
mote1985 [20]4 years ago
8 0

Answer:

$6.25

Explanation:

Use the dividend discount model the Gordon growth model

given

expected dividend per share = $0.50

growth rate =7%

Required rate o return = 15%

P = D1/r-g

  =0.50/0.15-0.07

  =$6.25

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