Suppose that the current dividend for a stock is Dtₒdₐᵧ, the expected dividend growth rate is r, and the interest rate is i. If we ignore risk, which of the following represents the dividend- discount model formula for the fundamental price of a stock?
A) Dtₒdₐᵧ / (i + g)
B) (i + g) / Dtₒdₐᵧ
C) Dtₒdₐᵧ (1 + g) / (i - g)
D) Dtₒdₐᵧ / (i - g)
Correct Answer:
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