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bearhunter [10]
3 years ago
5

Hailey Corporation pays a constant $9.45 dividend on its stock. The company will maintain this dividend for the next 13 years an

d will then cease paying dividends forever. If the required return on this stock is 10.7 percent, what is the current share price?
Business
1 answer:
Sloan [31]3 years ago
5 0

Answer:

$64.76

Explanation:

The current share price can be determined by calculating the present value of the dividend

Present value is the sum of discounted cash flows

Present value can be calculated using a financial calculator

Cash flow from year 1 to 13 = 9.45

I = 10.7

PV = 64.76

To find the PV using a financial calculator:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.  

3. Press compute  

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