Lu Enterprises paid its $1

Finance Dec 26, 2020

Lu Enterprises paid its $1.00 per share annual dividend today. Dividends will increase indefinitely by 3.0% annually. What is one share of stock worth today if the required return is 10.0%?

Expert Solution

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

=(1*1.03)/(0.1-0.03)

which is equal to

=$14.71(Approx)

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