question archive Assume Tourism corporation in Oman paid dividend OMR 20
Assume Tourism corporation in Oman paid dividend OMR 20
Subject:FinancePrice:2.86 Bought3
Assume Tourism corporation in Oman paid dividend OMR 20.1 per share last year. The dividends are expected to decline at 4 % in perpetuity and the discount rate is 0.157. what is the value of the stock in year 2? Select one: O a. 97.949 O b. 94.031 O c. 90.270 O d. All the given answers in this question are wrong O e. 151.993
Purchase A New Answer
Custom new solution created by our subject matter experts
GET A QUOTE
Answer Preview
Current price=D1/(discount rate-Growth rate)
=[20.1*(1-0.04)]/(0.157-(0.04)
=(19.296/0.197)
=97.9492385787
P2=current price*(1+growth rate)^2
=97.9492385787*(1-0.04)^2
=90.27(approx)
