The most recent dividend (Div₀)from Wallboard Inc,is $0.80,the dividend growth rate (g)is expected to be 6.25%,and the required rate of return (r)on the firm's stock is 10%.What is the stock price according to the constant growth dividend model?

Question

Quizplus · Accepted Answer

The stock price using the constant growth dividend model (Gordon Growth Model) is calculated as P = D0 * (1 + g) / (r - g). Substituting the given values: P = 0.80 * (1 + 0.0625) / (0.10 - 0.0625) = $22.67.

The Most Recent Dividend (Div0)from Wallboard Inc,is $0

The Most Recent Dividend (Div₀)from Wallboard Inc,is $0