question archive BC Corp presently pays an annual dividend of $1
BC Corp presently pays an annual dividend of $1
Subject:FinancePrice:2.86 Bought3
BC Corp presently pays an annual dividend of $1.50 per share and it is expected that these dividend payments will continue indefinitely. If BC's equity cost of capital is 12%, then the value of a share of BC's stock is closest to:
a. $18.50
b. $16.50
c. $14.50
d. $12.50
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d. $12.50
Price of the stock with zero dividend growth = Dividend/Cost of Capital
Price of the stock with zero dividend growth = $1.5/0.12
Price of the stock with zero dividend growth = $12.50
