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jek_recluse [69]
3 years ago
15

What is the price of a stock today if it pays a Dividend TODAY of $2. Its growth rate is 5%, and its market return is 12%?

Business
1 answer:
Nutka1998 [239]3 years ago
8 0

Answer:

$30.00  

Explanation:

The price of the stock can be derived from the stock theoretical price formula given and explained below:

stock price=expected dividend/(market return-growth rate)

expected dividend=dividend paid today*(1+growth rate)

expected dividend=$2*(1+5%)

expected dividend=$2.10

market rate of return=12%

growth rate=5%

stock price=$2.10/(12%-5%)

stock price=$2.10/7%

stock price=$30.00  

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3 years ago
Moonlight Company sells $ 300 comma 000 of 9​%, 15​-year bonds for 67.0453 on April​ 1, 2018. The market rate of interest
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<em>I hope this information can help you.</em>

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