Question

Symon's Suppers Co. has announced that it will pay a dividend of $4.39 per share one year from today. Additionally, the company expects to increase its dividend by 4.2 percent annually. The required return on the company's stock is 11.4 percent. What is the current share price?

Answer 1

The current share price is $60.97

Step-by-step explanation:

The values given are

Symon's super corporation is expected to pay a dividend of $4.39

The company expects to increase its dividend by 4.2percent every year

The required return on the company's stock is 11.4 percent

Therefore, the current share price is

= 4.39/( 11.4/100 + 4.2/100 )

= 4.39/( 0.114 - 0.042)

= 4.39/(0.072)

= 60.97

Thus, the current share price is $60.97