Star Ltd

Finance Nov 27, 2020

Star Ltd. will pay a dividend per share of $2.00 next quarter. The dividends are expected to grow at a constant rate of 1% per quarter, forever. If the quarterly discount rate is 2%, what is the price of the stock today?

Expert Solution

Stock price = Dividend for next period /(Required return - Growth rate)

= 2/(2%-1%)

= 2/0.01

= $200

Therefore, The share price as on today is $200

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