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keigleyhannah30
28.11.2020 •
Business
Assume that a company’s dividends per share are projected to grow at 2% each year, its next year’s dividends per share is $1.80, and its cost of equity capital is 5%. Estimate the company’s per share stock price. Round your answer to the nearest dollar.
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Ответ:
P0 = $60
Explanation:
Using the constant growth model of dividend discount model, we can calculate the price of the stock today. The DDM values a stock based on the present value of the expected future dividends from the stock. The formula for price today under this model is,
P0 = D1 / (r - g)
Where,
D1 is dividend expected for the next period /year
g is the growth rate
r is the required rate of return or cost of equity
P0 = 1.8 / (0.05 - 0.02)
P0 = $60
Ответ: