A stock is expected to pay $2.60 per share every year indefinitely and the equity cost of capital for the company is 11%. What price would an investor be expected to pay per share next year?
A) $5.91
B) $11.82
C) $17.73
D) $23.64

Name: A stock is expected to pay $2.60 per share every year indefinitely and the equity cost of capital for the company is 11%. What price would an investor be expected to pay per share next year? A) $5.91 B) $11.82 C) $17.73 D) $23.64
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Question

Quizplus · Accepted Answer

D) P₀ = $2.60 / 0.11 = $23.64

A Stock Is Expected to Pay $2