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Kay [80]
3 years ago
10

The Firm X just paid a dividend of $1.26 per share on its stock. The dividends are expected to grow at a constant rate of 5% per

year indefinitely. If investors require a 10% return on Firm X stock, what is the current price?
Business
1 answer:
Anastaziya [24]3 years ago
5 0

Answer: $26.46

Explanation:

The value of the stock can be solved using the Gordon growth model.

= \frac{Current dividend * (1 + growth)}{required return - growth rate} \\\\= \frac{1.26 * (1 + 0.05)}{0.10 - 0.05}\\\\= 26.46

= $26.46

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May the Talos guide you

6 0
3 years ago
Read 2 more answers
The economy is in short-run equilibrium when __________. a. aggregate demand intersects short-run aggregate supply. b. short-run
s2008m [1.1K]

Answer:

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Explanation:

Short run occurs when the amount a firm wishes to supply is equal to the amount demanded from the consumers. It is the area on the graph where the aggregate demand curve intersect with the short run supply curve.

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A consumer downloads 4 movies and 3 apps per week. Suppose the price is $4 per movie and $4 per app, and the marginal utility th
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