Question

Assume the firm’s dividend payment is $0.18, and that the required rate of return for the firm’s industry is 10.1%. What is the market value of firm’s shares under the Dividend Discount Model? Group of answer choices $18.30 $17.77 $1.78 $1.83

Answer 1

the market value of the share is $1.78

Step-by-step explanation:

The computation of the market value of the firm under the dividend discount model is shown below:

The Market value of the share is

= Dividend Payment ÷ Required return

= $0.18 ÷ 10.1%

= $1.78

Hence, the market value of the share is $1.78

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

And, the same is to be considered