Cape Corp. will pay a dividend of $4.50 next year. The company has stated that it will maintain a constant growth rate of 5.25 percent a year forever. a. If you want a return of 18 percent, how much will you pay for the stock

a. $35.29

b. $78.26

Explanation:

Question b. Current stock price if return is 11%

a. Current stock Price (P0) = Next year dividend / (Ke - Growth)

If return is = 18%

Current stock Price = 4.5 / (0.18 - 0.0525 = $35.29

b. Current stock Price (P0) = Next year dividend / (Ke - Growth)

If return is = 11%

Current stock Price = 4.5 / (0.11 - 0.0525) = $78.26

hi : ) i found this so i hope this !

"we first find value of tax in dollars.

the difference between the two prices   is: 23. 54 - 22 = 1.54

therefore the sales tax in dollars is 1.54

the tax % will be   (amount of tax / original cost price ) × 100

(1.54 / 22) × 100  → (0.07) × 100 =   7

so the tax rate is 7%

we can double check the answer.

7 % of 22   → (7/100) × 22 → 0.07 × 22 = 1.54

22 + 1.54 = 23.54"

i might look it up later.