Leslie\'s Unique Clothing Stores offers a common stock that pays an annual divid

Question

Leslie's Unique Clothing Stores offers a common stock that pays an annual dividend of $2.30 a share. The company has promised to maintain a constant dividend. How much are you willing to pay for one share of this stock if you want to earn a 11.60 percent return on your equity investments?

Leslie's Unique Clothing Stores offers a common stock that pays an annual dividend of $2.30 a share. The company has promised to maintain a constant dividend. How much are you willing to pay for one share of this stock if you want to earn a 11.60 percent return on your equity investments?

Explanation / Answer

P0= D1/(Ke-g)

P0= 2.30/(.1160-0)

P0= 2.30/.1160

P0= $19.83

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