Bui Corp. pays a constant $13.20 dividend on its stock. The company will maintai

Question

Bui Corp. pays a constant $13.20 dividend on its stock. The company will maintain this dividend for the next ten years and will then cease paying dividends forever.

If the required return on this stock is 12 percent, what is the current share price? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

Bui Corp. pays a constant $13.20 dividend on its stock. The company will maintain this dividend for the next ten years and will then cease paying dividends forever.

Explanation / Answer

Current Price= D1/r-g= The next year dividend/required rate of return-growth rate of dividend

Growth rate= 0 Reqired Rate of return

= $13.2/.12-0= $110

Related Questions

Navigate

• Browse (All)
• Browse B
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.