ACME,Inc.expects its current annual $2.50 per share common stock dividend to remain the same for the foreseeable future.Therefore,the value of the stock to an investor with a required return of 12% is

Question

Quizplus · Accepted Answer

To calculate the value of the stock to an investor with a required return of 12%, we can use the dividend discount model:

Value of Stock = Dividend / Required Return

Value of Stock = $2.50 / 0.12

Value of Stock = $20.83

Therefore, the best choice is C.

ACME,IncExpects Its Current Annual $2