help in homework

New User?

Fill This Form To Receive Instant Help

Help in Homework
trustpilot ratings
google ratings


Homework answers / question archive / Charles Wilson is interested in purchasing the common stock of Sunland, Inc

Charles Wilson is interested in purchasing the common stock of Sunland, Inc

Finance

Charles Wilson is interested in purchasing the common stock of Sunland, Inc., which is currently priced at $48.38. The company is expected to pay a dividend of $2.58 next year and to increase its dividend at a constant rate of 8.60 percent.

What should the market value of the stock be if the required rate of return is 14 percent?

 (Round answer to 2 decimal places, e.g. 15.20.)

 

Market value of stock$

pur-new-sol

Purchase A New Answer

Custom new solution created by our subject matter experts

GET A QUOTE

Answer Preview

Computation of Market Value of Stock:

Market Value of Stock = Next Year Dividend/(Required Rate of Return - Growth Rate)

= $2.58/(14%-8.60%)

= $2.58 / 5.40%

Market Value of Stock = $47.78

Sitejabber (5.0)

BBC (5.0)

Trustpilot (4.9)

Google (5.0)