What should be the current price of a share of stock if a $5 dividend was just paid,the stock has a required return of 20%,and a constant dividend growth rate of 6%?
A) $19.23
B) $25.00
C) $35.71
D) $37.86

Name: What should be the current price of a share of stock if a $5 dividend was just paid,the stock has a required return of 20%,and a constant dividend growth rate of 6%? A) $19.23 B) $25.00 C) $35.71 D) $37.86
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Question

Quizplus · Accepted Answer

Price = ($5 × 1.06)/(0.20 − 0.06) = $37.86

What Should Be the Current Price of a Share of Stock