Question

You are considering purchasing stock in Canyon Echo. You feel the company will increase its dividend at 4.7 percent indefinitely. The company just paid a dividend of $3.38 and you feel that the required return on the stock is 10.9 percent. What is the price per share of the company's stock?
a.$54.22


b.$57.08


c.$51.37


d.$31.01


e.$54.52

Answer 1

Answer:

b.$57.08

Explanation:

Current price=D1/(Required return-Growth rate)

=(3.38*1.047)/(0.109-0.047)

which is equal to

=$57.08.