The Lost Continent Store pays a constant dividend.Last year, the dividend yield was 5.75 percent when the stock was selling for $67.5 a share.What must the stock price be today if the market currently requires a 5.25 percent dividend yield on this stock?

Question

Quizplus · Accepted Answer

The dividend amount can be calculated using last year's yield: $67.5 * 5.75% = $3.88125. To find the current stock price with a 5.25% yield, divide the dividend by the new yield: $3.88125 / 5.25% = $73.93.

The Lost Continent Store Pays a Constant Dividend