Question

Burkhardt Corp. pays a constant $13.60 dividend on its stock. The company will maintain this dividend for the next 9 years and will then cease paying dividends forever. If the required return on this stock is 12 percent, what is the current share price?

Answer 1

Answer:

current share price = $72.464197

Explanation:

given data

dividend = $13.60

time = 9 year

required return = 12 percent

solution

we get here current share price that is express as

current share price = dividend × $\frac{1-(1+r)^{-t}}{r}$    ..................1

put here value and we get current share price

current share price = $13.60 × $\frac{1-(1+0.12)^{-9}}{0.12}$  

current share price = $72.464197