Baseheart,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, we can use the dividend discount model:

Value of stock = Annual dividend / Required return

Plugging in the given values, we get:

Value of stock = $2.50 / 0.12 = $20.83

Therefore, the value of the stock to an investor with a required return of 12% is $20.83. Choice C is the correct answer.