Vincent’s hotel currently pays a $2.20 common stock dividend. dividends have been recently growing at a 3% annual rate and are expected to continue growing at this rate for the next 2 years. thereafter, the growth rate is expected to be 0% for the foreseeable future. what is the current value of vincent’s hotel common stock to an investor requiring 17% rate of return?

The current value of Vincent's Hotel common stock is US$ 12.95, that fulfills the requirement of an investor of 17% of rate of return annually.

Step-by-step explanation:

1. Let's review the information given for answering correctly the question:

Currently common stock dividend = US$ 2.20

Annual growth of the dividend for the next 2 years = 3%

Annual growth of the dividend after the next 2 years = 0%

2. What is the current value of Vincent’s Hotel common stock to an investor requiring 17% rate of return?

17% = 0.17

Current value of Vincent's Hotel common stock = 2.20/0.17

Current value of Vincent's Hotel common stock = US$ 12.95

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step-by-step explanation:

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