Secolo Corporation stock currently sells for $27 per share. The market requires

Question

Secolo Corporation stock currently sells for $27 per share. The market requires a return of 10.8 percent on the firm’s stock. If the company maintains a constant 3.4 percent growth rate in dividends, what was the most recent dividend per share paid on the stock?

value: 10.00 points You did not receive full credit for this question in a previous attempt Secolo Corporation stock currently sells for $27 per share. The market requires a return of 10.8 percent on the firm's stock. If the company maintains a constant 3.4 percent growth rate in dividends, what was the most recent dividend per share paid on the stock? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Dividend paid per share

Explanation / Answer

Current Price per share, P0 = $27
Required Return, rs = 10.80%
Growth Rate, g = 3.40%

Required Return, r = D1 / P0 + g
0.1080 = D1 / $27 + 0.034
0.074 = D1 / $27
D1 = $1.998

D0 * (1 + g) = D1
D0 * 1.034 = $1.998
D0 = $1.93

So, dividend paid per share is $1.93

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

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