Mosser Corporation common stock paid $1.69 in dividends last year and is expecte

Question

Mosser Corporation common stock paid $1.69 in dividends last year and is expected to grow indefinitely at an annual 5 percent rate. What is the value of the stock if you require a return of 11 percent? The value of the Mosser Corporation common stock is ___________ (Round to the nearest cent.) Mosser Corporation common stock paid $1.69 in dividends last year and is expected to grow indefinitely at an annual 5 percent rate. What is the value of the stock if you require a return of 11 percent? The value of the Mosser Corporation common stock is ___________ (Round to the nearest cent.) Mosser Corporation common stock paid $1.69 in dividends last year and is expected to grow indefinitely at an annual 5 percent rate. What is the value of the stock if you require a return of 11 percent? The value of the Mosser Corporation common stock is ___________ (Round to the nearest cent.)

Explanation / Answer

Price of stock

=D1/(r-g)

Price of stock

=D1/(r-g)

=1.7745/0.110-.05 =1.7745/.06 =29.575 =29.58 =30 D1 =D0(1+g) =1.69(1+.05) =1.69(1.05) =1.69*1.05 =1.7745

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