What should you pay for a stock if next year's annual dividend is forecast to be $5.25,the constant-growth rate is 2.85%,and you require a 15.5% rate of return?
A) $31.25
B) $38.87
C) $41.50
D) $42.68

Name: What should you pay for a stock if next year's annual dividend is forecast to be $5.25,the constant-growth rate is 2.85%,and you require a 15.5% rate of return? A) $31.25 B) $38.87 C) $41.50 D) $42.68
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Question

Quizplus · Accepted Answer

Price = $5.25/(0.155 − 0.0285) = $41.50

What Should You Pay for a Stock If Next Year's