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Posts: 195
2 weeks ago
Praetorian Industries will pay a dividend of $2.50 per share this year and has an an equity cost of capital of 8%. Praetorian's stock is currently trading at $84 per share. By comparing Praetorian with similar firms, an investor expects that its dividends will grow by up to 5% per year. What is the best next step that the investor should take regarding Praetorian's stock?

▸ Short Praetorian's stock.

▸ Revise Praetorian's equity cost of capital.

▸ Sell any Praetorian stock that she owns.

▸ Revise her estimate of Praetorian's dividend growth.
Textbook 
Fundamentals of Corporate Finance
Edition: 2nd
Authors:
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Posts: 204
2 weeks ago
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Revise her estimate of Praetorian's dividend growth.
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