Staal Corporation will pay a $3.40 per share dividend next year. The company ple

Question

Staal Corporation will pay a $3.40 per share dividend next year. The company pledges to increase its dividend by 4.5 percent per year indefinitely. If you require a return of 11 percent on your investment, how much will you pay for the company%u2019s stock today? (Round your answer to 2 decimal places. (e.g., 32.16))

Staal Corporation will pay a $3.40 per share dividend next year. The company pledges to increase its dividend by 4.5 percent per year indefinitely. If you require a return of 11 percent on your investment, how much will you pay for the company%u2019s stock today? (Round your answer to 2 decimal places. (e.g., 32.16))

Explanation / Answer

stock price=3.4/(0.11-.045)=52.31

stock price=D1/(return-growth)

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