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erica [24]
3 years ago
5

NoGrowth Industries presently pays an annual dividend of $ 1.90 per share and it is expected that these dividend payments will c

ontinue indefinitely. If​ NoGrowth's equity cost of capital is 11​%, then the value of a share of​ NoGrowth's stock is closest​ to: A. $ 20.72 B. $ 19.00 C. $ 17.27 D. $ 13.82
Business
1 answer:
dybincka [34]3 years ago
5 0

Answer:

$17.27

Explanation:

The stock intrinsic value is calculated using dividend discounted model (DDM). The DDM is stated as below:

Stock intrinsic value = [This year dividend x (1 + Dividend growth)]/[Equity cost of capital - Dividend growth]

                                  = [1.9 x (1 + 0%)]/[11% - 0%] = $17.27

So vlaue of NoGrowth's stock is estimated at $17.27

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In 1920, it was reported that there were 60 billion barrels of oil in the world oil reserves and we were using 6 billion barrels
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