Question

g you are considering buying a stock that will pay a dividend of 2.3 next year the dividend is expected to grow at 5.6 per year forever the interest rate 10.6% what is the price of this stock today

Answer 1

the price of the stock today is $46

Step-by-step explanation:

The computation of the price of the stock today is shown below;

= Expected dividend ÷ (required rate of return - growth rate)

= $2.3 ÷ (10.6% - 5.6%)

= $2.3 ÷ 0.05

= $46

hence, the price of the stock today is $46

We simply applied the above formula so that the correct value could come

And, the same is to be considered