Poutine Professionals Inc.has just paid a dividend of $0.55 per share.The dividends are expected to grow at an annual rate of 5 percent indefinitely.What is today's stock price if the required return is 12.5 percent?

Name: Poutine Professionals Inc.has just paid a dividend of $0.55 per share.The dividends are expected to grow at an annual rate of 5 percent indefinitely.What is today's stock price if the required return is 12.5 percent?
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Quizplus · Accepted Answer

K_c = [$0.55(1+5%)]/(12.5%−5%)= $7.70