Von Bora Corporation (VBC)is expected to pay a $2.00 dividend at the end of this year.If you expect VBC's dividend to grow by 5% per year forever and VBC's equity cost of capital is 13%,then the value of a share of VBC stock is closest to:

Question

Quizplus · Accepted Answer

The correct answer is A because the value of a share of VBC stock is closest to $25.00. This is calculated using the dividend discount model, which takes into account the expected dividend, the growth rate of the dividend, and the equity cost of capital.

Von Bora Corporation (VBC)is Expected to Pay a $2