Which of the following is the formula for finding the price, P, of a stock with an original cash flow of C, a discount factor of d, and a constant growth rate of cash flows equal to g?

Question

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The formula for finding the price, P, of a stock with an original cash flow of C, a discount factor of d, and a constant growth rate of cash flows equal to g is P = C/(d + g). This takes into account the discounted present value of the cash flows and the expected growth rate of those cash flows. Choice A multiplies the factors together instead of dividing, Choice C involves adding instead of dividing, and Choice D adds the discount factor and constant growth rate without properly accounting for the original cash flow.

Which of the Following Is the Formula for Finding the Price