The last dividend (Div0)is $1.80,the growth rate (g)is 6%,and the required rate of return (r)is 12%.What is the stock price according to the constant growth dividend model?

Name: The last dividend (Div0)is $1.80,the growth rate (g)is 6%,and the required rate of return (r)is 12%.What is the stock price according to the constant growth dividend model?
Brand: Quizplus
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Question

Quizplus · Accepted Answer

The constant growth dividend model is:Stock Price = Div0 * (1 + g) / (r - g)= 1.80 * (1 + 0.06) / (0.12 - 0.06)= 1.80 * 1.06 / 0.06= $30.80

The Last Dividend (Div0)is $1