Gentleman Gym just paid its annual dividend of $6 per share, and it is widely ex

ID: 2705978 • Letter: G

Question

Gentleman Gym just paid its annual dividend of $6 per share, and it is widely expected that the dividend will increase by 5% per year indefinitely.

What price should the stock sell at? The discount rate is 15%. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

What price should the stock sell at? The discount rate is 12%. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Gentleman Gym just paid its annual dividend of $6 per share, and it is widely expected that the dividend will increase by 5% per year indefinitely.

a) Po =6*1.05/0.1 = $63.0

b) Po = 6*1.05/(0.12-0.05) =$90

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