KIT Kars stock currently sells for $54.10 per share and has a fixed 2.5 percent dividend growth rate.What was the amount of the last dividend paid if the required rate of return is 11 percent?

Question

Quizplus · Accepted Answer

The correct answer is A because the last dividend paid is $4.49. This can be calculated using the formula: Last dividend = Current dividend / (1 + growth rate) ^ number of years. In this case, the current dividend is $54.10 * 0.025 = $1.3525, the growth rate is 2.5%, and the number of years is 1. Therefore, the last dividend paid is $1.3525 / (1 + 0.025) ^ 1 = $4.49.

KIT Kars Stock Currently Sells for $54