Business, 28.11.2019 19:31, Weser17

Firm a is expected to pay a dividend of $1.00 at the end of the year. the required rate of return is rs = 11%. other things held constant, what would the stock’s price be if the growth rate was 5%?
what if g was 0%?

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answered: roserose3098

a. If the growth rate was 5%

The stock price = D1/ke-g

= $1.00/0.11-0.05

= $1.00/0.06

= $16.67

b. If the growth rate was 0%

The stock price = $1.00/0.11-0

= $9.09

Explanation: This question relates to the determination of stock price on the assumption that dividend will be paid at the end of the year. In the formula, D1 denotes dividend at the end of the year, Ke represents required rate of return and g is the growth rate.

answered: Guest

It would be contaminated with germs

answered: Guest

Amuscle thats keeping you from having pain.

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Firm a is expected to pay a dividend of $1.00 at the end of the year. the required rate of return is...