question archive Bavarian Sausage is expected to pay a $1
Bavarian Sausage is expected to pay a $1
Subject:FinancePrice:2.86 Bought3
Bavarian Sausage is expected to pay a $1.75 dividend next year and investors expect that dividend to grow by 4% cach year forever. If the required return on the stock investment is 10%, what should be the price of the stock in s today?
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rate positively .
| Price of stock today = | dividend next year/(required rate - Growth rate) | |||
| 1.75/(10%-4%) | ||||
| $ 29.17 | ||||
| Ans = $29.17 |
