Business, 28.11.2019 19:31 Weser17

Firm a is expected to pay a dividend of $1.00 at the end of the year. the required rate of return is rs = 11%. other things held constant, what would the stock’s price be if the growth rate was 5%?
what if g was 0%?

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Answer from: roserose3098

a. If the growth rate was 5%

The stock price = D1/ke-g

= $1.00/0.11-0.05

= $1.00/0.06

= $16.67

b. If the growth rate was 0%

The stock price = $1.00/0.11-0

= $9.09

Explanation: This question relates to the determination of stock price on the assumption that dividend will be paid at the end of the year. In the formula, D1 denotes dividend at the end of the year, Ke represents required rate of return and g is the growth rate.

Answer from: Quest

d) social security number

let me know if i am correct or not, so i can edit the answer.

Answer from: Quest

Answerpredicts that the clash between an exploding population and limited resources will eventually bring economic growth to an end;

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Firm a is expected to pay a dividend of $1.00 at the end of the year. the required rate of return is...

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