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Sladkaya [172]
3 years ago
5

Future Motors is expected to pay a $3.30 a share annual dividend next year. Dividends are expected to increase by 3.75 percent a

nnually. What is one share of this stock worth to you today if your required rate of return is 22 percent
Business
1 answer:
Alborosie3 years ago
3 0

Answer:

One share of this stock worth to you today is $18.08

Explanation:

According to the question, we have the following data:

D1 = $3.30

g = 0.0375

Ke = 0.22

one share of this stock worth to you today = P0

Hence to calculate the P0 we have to use the following formula:

Ke = D1/P0 + g

0.22 = 3.3/P0 + 0.0375

P0 = $18.08

One share of this stock worth to you today is $18.08

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This is my short version.

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