Leslie's Unique Clothing Stores offers a common stock that pays an annual dividend of $2.70 a share. The company has promised to maintain a constant dividend. How much are you willing to pay for one share of this stock if you want to earn a 12.70 percent return on your equity investments?

Question

Business

Cheeto

11 December, 16:22

Leslie's Unique Clothing Stores offers a common stock that pays an annual dividend of $2.70 a share. The company has promised to maintain a constant dividend. How much are you willing to pay for one share of this stock if you want to earn a 12.70 percent return on your equity investments?

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Kai Walls · Answer 1

If i want to earn 12.70 percent return on my equity investments i am willing to pay $21.25

Explanation:

PV of Stock - Zero Growth.

P = Divident / Required return

D = 2.70

R = 12.70

P = 2.70/.1270

P = $21.25