Today your company paid a dividend of $2 per share

Finance Dec 24, 2020

Today your company paid a dividend of $2 per share. The growth rate of the dividend is expected to be constant at 10% per year. The required return is 15%. What is your firm’s stock currently worth?

A) $$1.91 B) $13.33 C) $14.67 D) $40

E) $44

Expert Solution

Current price=D1/(Required return-Growth rate)

=(2*1.1)/(0.15-0.1)

which is equal to

=$44

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