Krispy Kreme is expected to pay a dividend of $2 next period and the dividends a
ID: 2775519 • Letter: K
Question
Krispy Kreme is expected to pay a dividend of $2 next period and the dividends are expected to grow at a 4% per year. the required return is 14%. what is the current stock price?Krispy Kreme is expected to pay a dividend of $2 next period and the dividends are expected to grow at a 4% per year. the required return is 14%. what is the current stock price?
Krispy Kreme is expected to pay a dividend of $2 next period and the dividends are expected to grow at a 4% per year. the required return is 14%. what is the current stock price?
Explanation / Answer
Current Stock Price = dividend x (1 + dividend growth rate) / required rate – dividend growth rate
= (2 x (1+0.04)) / (0.12 – 0.04) = $26
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