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borteleto borteleto
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Posts: 2477
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5 years ago
You are considering the purchase of a common stock that paid a dividend of $2.00 yesterday. You expect this stock to have a growth rate of 15 percent for the next 3 years, resulting in dividends of
D1 = $2.30, D2 = $2.645, and D3 = $3.04. The long-run normal growth rate after year 3 is expected to be
10 percent (that is, a constant growth rate after year 3 of 10% per year forever). If you require a 14 percent rate of return, how much should you be willing to pay for this stock?
A) $89.75
B) $83.65
C) $56.46
D) $62.57
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DeanaRayDeanaRay
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#1
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5 years ago
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borteleto Author
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5 years ago
Smart ... Thanks!
paulinaibarra98
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Yesterday
Thank you, thank you, thank you!
aznzergs
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2 hours ago
This calls for a celebration Person Raising Both Hands in Celebration
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