Bui Corp. pays a constant $13.80 dividend on its stock. The company will maintai

Question

Bui Corp. pays a constant $13.80 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 9 percent, what is the current share price? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

Bui Corp. pays a constant $13.80 dividend on its stock. The company will maintain this dividend for the next seven years and will then cease paying dividends forever.

Explanation / Answer

CURRENT SHARE PRICE IS PV OF ALL FUTURE DIVIDEND

= DIVIDEND * PVIFA 9%, 7 PERIODS

= $13.80 * 5.0330

= $69.45

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