Question

Symon's Suppers Co. has announced that it will pay a dividend of $4.25 per share one year from today. Additionally, the company expects to increase its dividend by 4.5 percent annually. The required return on the company's stock is 10.7 percent. What is the current share price

Answer 1

$68.55

Step-by-step explanation:

The computation of the current share price is shown below:

Current price = Today dividend price per share ÷ (Required rate of return-Growth rate)

= $4.25 ÷ (0.107-0.045)

=$68.55

We simply applied the above formula after considering all the three items given in the question so that the correct value could come