Ask Question
22 June, 20:39

Take Time Corporation will pay a dividend of $4.55 per share next year. The company pledges to increase its dividend by 6.5 percent per year, indefinitely. If you require a return of 9 percent on your investment, how much will you pay for the company's stock today? (Do not round intermediate calculations and round your answer to 2 decimal places, e. g., 32.16.) Current stock price $

+5
Answers (1)
  1. 22 June, 22:58
    0
    The correct answer is $182.

    Explanation:

    According to the scenario, the given data are as follows:

    Dividend = $4.55

    Growth rate = 6.5%

    Required rate of return = 9%

    So, we can calculate the current stock price by using the following formula:

    Current stock price = Dividend : (Required rate of return - Growth rate)

    By putting the value, we get

    Current stock price = $4.55 : (9% - 6.5%)

    = $4.55 : 0.025

    = $182
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Take Time Corporation will pay a dividend of $4.55 per share next year. The company pledges to increase its dividend by 6.5 percent per ...” 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