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1 April, 11:21

Hi-Tek plans to pay a $6 per share dividend one year from today, and will increase the dividend by 4 percent per year forever. What is the current share price if the required return on this stock is 16 percent

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  1. 1 April, 12:58
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    The current share price if the required return on this stock is 16 percent is $50.

    Explanation:

    price = dividend next year / (required rate of return - growth rate)

    = 6 / (16% - 4%)

    = 50

    Therefore, The current share price if the required return on this stock is 16 percent is $50.
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