Schiller corporation will pay a $2.78 per share dividend next year. the company pledges to increase its dividend by 4.5 percent per year, indefinitely. if you require a return of 15 percent on your investment, how much will you pay for the company’s stock today?

The Market price for the stock will be 26.48 according to the gordon dividend grow model.

Explanation:

We will calculate the stock price, using the gordon model for the dividend grow model:

D1 = 2.78

return = 15%

grow =    4.5%

Stock market = 26,47619 = $26.48

there was no passage listed but using the process of elimination i'd say it was d. the high economy would do the opposite. i don't see how low prices would affect it. high unemployment is possible but i feel d is the better answer.

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