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ss7ja [257]
3 years ago
12

Stoneheart Group is expected to pay a dividend of $3.11 next year. The company's dividend growth rate is expected to be 4.2 perc

ent indefinitely and investors require a return of 11.4 percent on the company's stock. What is the stock price?
Business
1 answer:
lukranit [14]3 years ago
8 0

Answer:

$43.19

Explanation:

Use dividend discount model(DDM) to solve this question; specifically constant dividend growth model.

P0 = D1/(r-g)

P0 = Current price

D1 = Next year's dividend = $3.11

r = investors' required return = 11.4% or 0.114 as a decimal

g = dividend growth rate = 4.2% or 0.042 as a decimal

P0 = 3.11/(0.114 - 0.042)

P0 = $43.19

Therefore, this stock price is $43.19

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8 0
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A company had credit sales of $ 35 comma 000 and cash sales of $ 25 comma 000 during the month of May. Also during​ May, the com
Likurg_2 [28]

Answer:

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7 0
3 years ago
Which of the answer choices shows the correct punctuation? if managers don't prepare for international business trips, by learni
Mandarinka [93]

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5 0
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If the required rate of return on a bond (rd) is greater than its coupon interest rate and will remain above that rate, then the
Blizzard [7]

Answer:

a. True

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If YTM > coupon rate, then Price < Par value

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