Toronto Skates Inc.is paying dividends on a regular basis with a constant growth rate.The dividend last year was $ 1.00 and this year is $1.25.If the required rate of return is 12%,what is the price of the stock?

Name: Toronto Skates Inc.is paying dividends on a regular basis with a constant growth rate.The dividend last year was $ 1.00 and this year is $1.25.If the required rate of return is 12%,what is the price of the stock?
Brand: Quizplus
Rating: 4.8 (46 reviews)

Question

Quizplus · Accepted Answer

G = (D₁ - D₀)/D₀ = 25% which is higher than 12%