Business, 26.10.2020 17:40, drey10

You are considering purchasing stock in Canyon Echo. You feel the company will increase its dividend at 4.3 percent indefinitely. The company just paid a dividend of $3.26 and you feel that the required return on the stock is 10.5 percent. What is the price per share of the company's stock

Answers

$54.84

Explanation:

Here, the price per share will be calculated as per the constant growth formula : Price = (Dividend x (1+growth rate)) ÷ (return rate - growth rate)

Dividend $3.26 , growth rate = 4.3%=0.043 , return rate = 0.105

$\text{Price}=\dfrac{3.26\times(1+0.043)}{0.105-0.043}\\\\=\dfrac{3.26\times(1.043)}{0.062}\\\\=\dfrac{3.40018}{0.062}\approx\ \$54.84$

Hence, the price per share of the company's stock = $54.84

answered: Guest

cognitive overload: having a lot on your mind impairs decision-making and tends to result in the simplest, but not necessarily best, option being selected.

empathy gaps: overlooking how you might feel in a different situation can result in unnecessary purchases, such as overbuying when shopping for food on an empty stomach.

optimism and overconfidence: wearing rose-tinted glasses and having unrealistic expectations about the future can affect money management and leave you unprepared for a change in circumstance.

instant gratification: seeking instant gratification drives impulsive spending and can undermine long-term planning and savings.

harmful habits: automatic or mindless behaviour can amplify a poor financial decision as it becomes a recurring event.

social norms: we are heavily influenced by the actions of others; while this can be in certain circumstances, it also contributes to the pressure to keep up with the joneses through conspicuous consumption.

answered: Guest

24 years, i believe is the correct answer.

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You are considering purchasing stock in Canyon Echo. You feel the company will increase its dividend...