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Katena32 [7]
3 years ago
9

You are considering purchasing stock in Canyon Echo. You feel the company will increase its dividend at 3.9 percent indefinitely

. The company just paid a dividend of $3.62 and you feel that the required return on the stock is 11.7 percent. What is the price per share of the company's stock
Business
1 answer:
yKpoI14uk [10]3 years ago
5 0

Answer:

$48.2

Explanation:

The increase in dividend is 3.9%

= 3.9/100

= 0.039

The recently paid dividend is $3.62

The required return is 11.7%

= 11.7/100

= 0.117

Therefore the price per share of the company stock can be calculated as follows

= 3.62(1+0.039)/0.117-0.039

= 3.62(1.039)/0.078

= 3.761/0.078

= 48.2

Hence the price per share is $48.2

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See explanation below

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