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2 annual dividend on its common stock. The dividend is expected to increase at 6% per year indefinitely. If the required rate of return is 16%, what is the stock's value?

Respuesta :

letmeanswer

Solution:

Given,

R= 16%

g= 8%

Calculate stock value ,

[tex]D_{1}[/tex]=[tex]D_{0}[/tex] x (1+g) ;

D1= 2.16

P0= ( 2.16/0.16 )-0.08

P0= $27

A value stock is a lower price protection exchange that can otherwise be implied by the performance of the company.

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