Weisbro and Sons common stock sells for $52 a share and pays an annual dividend

Question

Weisbro and Sons common stock sells for $52 a share and pays an annual dividend that increases by 4.4 percent annually. The market rate of return on this stock is 10.10 percent. What is the amount of the last dividend paid by Weisbro and Sons?

$3.10

$2.84

$5.03

$2.19

$2.80

Weisbro and Sons common stock sells for $52 a share and pays an annual dividend that increases by 4.4 percent annually. The market rate of return on this stock is 10.10 percent. What is the amount of the last dividend paid by Weisbro and Sons?

Explanation / Answer

$2.84 Dear Student Thank you for using Chegg Please find below the answer and please give thumbs up   Statementshowing Computations Paticulars Amount Ke= D1/P0 + g ke-g = D1/P0 D1 = (ke-g)P0 Where P0 is the price 52 Ke is the required return 10.10% g is the growth rate 4.40% D1 is dividend at end of year D1 = (10.10%-4.4%)52 D1 = (5.7%)52 D1 = $2.96 Last dividend paid = 2.96/(1 + 4.4%) or 2.96/1.044                          2.84

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