Ask Question
15 January, 04:18

1. The common stock of Textile Mills pays an annual dividend of $1.65 a share. The company has promised to maintain a constant dividend even though economic times are tough. How much are you willing to pay for one share of this stock if you want to earn a 12 percent annual return

+4
Answers (1)
  1. 15 January, 08:09
    0
    The maximum price of the stock that can be paid is $13.75

    Explanation:

    The value can be found using the Dividend Valuation Model the value of the stock can be calculated from the following formula:

    Value of Stock = Dividend paid / Required rate of return

    By putting the values we have:

    Value of stock = $1.65 / 12% = $13.75
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “1. The common stock of Textile Mills pays an annual dividend of $1.65 a share. The company has promised to maintain a constant dividend ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers