1 XYZ Company paid a dividend of $2 per share on common stock for the year ending March 31, 2010

Finance Aug 08, 2020

1 XYZ Company paid a dividend of $2 per share on common stock for the year ending March 31, 2010. A constant growth of 10% per annum has been forecast for an indefinite future. Investors required rate of return is 15%. What would be stock value?

Expert Solution

Stock value is = (Dividend*(1+Growth rate))/(Required rate of return - Growth rate)

Stock value is = (2*(1+0.10))/(0.15-0.10)

Stock value is = 2.20/0.05

Stock value is = $ 44/.

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