Bowman Corp. pays a constant $13.30 dividend on its stock. The company will main

Question

Bowman Corp. pays a constant $13.30 dividend on its stock. The company will maintain this dividend for the next seven years and will then cease paying dividends forever.

If the required return on this stock is 10 percent, what is the current share price? (Do not include the dollar sign ($). Round your answer to 2 decimal places (e.g., 32.16).)

Bowman Corp. pays a constant $13.30 dividend on its stock. The company will maintain this dividend for the next seven years and will then cease paying dividends forever.

Explanation / Answer

P0= D1/(Ke-g)

P0= 13.30PVIFA(10%,7)

P0= 13.30x4.8684

P0=Current share price= $64.75

OR

P0= Current share price=13.30/1.1+( 13.30/1.1^2)+( 13.30/1.1^3)+( 13.30/1.1^4)+( 13.30/1.1^5)+( 13.30/1.1^6)+( 13.30/1.1^7)= $64.75

Related Questions

Navigate

• Browse (All)
• Browse B
• Subjects

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