Last week,Railway Cabooses paid its annual dividend of $1.12 a share.The company has been reducing its dividends by 4 percent each year.What is one share of stock worth at a required return of 17 percent?

Name: Last week,Railway Cabooses paid its annual dividend of $1.12 a share.The company has been reducing its dividends by 4 percent each year.What is one share of stock worth at a required return of 17 percent?
Brand: Quizplus
Rating: 4.7 (46 reviews)

Question

Quizplus · Accepted Answer

P₀ = {$1.12 × [1 + (−0.04)]} / [0.17 − (−0.04)] = $5.12

Last Week,Railway Cabooses Paid Its Annual Dividend of $1