ps://edugen.wileyplus.com/edugen/student/mainfr.uni Problem 9.21 You own shares
ID: 2800659 • Letter: P
Question
ps://edugen.wileyplus.com/edugen/student/mainfr.uni Problem 9.21 You own shares of Old World DV dividends at Old World have been declining 9 percent per year. The firm just paid a dividend of $1.10 per share. The required rate of return for a stock D Company and are interested in selling them. With so many people downloading music these days, sales, profits, and this intermediate calculations. Round answer to 2 decimal places, e.g. 15.20.) risky is 15 percent. If dividends are expected to decline at 9 percent per year, what is a share of the stock worth today? (Do not round Worth of share of stock By accessing this Question Assistance, you will learn while you earn points based on the Point Potential Policy set by your instructor. Question Attempts: 0 of 3 used SAVE FOR LATER answer this question correctly in two attempts or less.Explanation / Answer
price = dividend next year /(required rate of return - growth rate)
=>
price = 1.1 * (1 -9%)/(15% - (-9%))
= 1.1 * 0.91/24%
= 4.17
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