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jetblackcap
01.11.2019 •
Business
Lohn corporation is expected to pay the following dividends over the next four years: $19, $15, $14, and $5.50. afterward, the company pledges to maintain a constant 3 percent growth rate in dividends forever. if the required return on the stock is 10 percent, what is the current share price? (round your answer to 2 decimal places. (e.g., 32.16))
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Ответ:
Current share price=$1.91
Explanation:
The current share price of the stock can be expressed as;
Current stock value=D1/(k-g)
where;
D1=Expected annual dividend per share
k=required rate of return
g=growth rate of dividend
In our case;
D1=Average dividend per share=(19+15+14+5.5)/4
D1=47.2/4=$13.375
k=10%
g=3%
Replacing;
Current share price=13.375/(10-3)
Current share price=13.375/7
Current share price=$1.91
Ответ:
The CORRECT answers are: lose 2, gain1, lose1, not form an ion, lose 3