\"Financial analysts forecast Safeco Corporation (SAF) growth for the future to

Question

"Financial analysts forecast Safeco Corporation (SAF) growth for the future to be a constant 10 percent. Safeco's recent dividend was $1.20. What is the value of Safeco stock when the required return is 12 percent"

I'm not sure how to answer this question I need the formula

"Financial analysts forecast Safeco Corporation (SAF) growth for the future to be a constant 10 percent. Safeco's recent dividend was $1.20. What is the value of Safeco stock when the required return is 12 percent" I'm not sure how to answer this question I need the formula

Explanation / Answer

Dividend recent = $ 1.20

Required return = 12 % = 0.12

Growth = 10% = 0.1

Price of Stock = D1/(r - g) = 1.20*(1+0.1)/(0.12-0.1) = 1.2*1.1/0.02 = $ 66

Therefore, Price of Stock = $ 66   

Related Questions

Navigate

• Browse (All)
• Browse #
• Subjects

---

---

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