question archive Company X has 100 shares outstanding
Company X has 100 shares outstanding
Subject:FinancePrice:2.86 Bought3
Company X has 100 shares outstanding. It earns $1165 surplus cash per year and expects to pay all of it as dividends. If the firm expects to maintain this dividend forever, calculate the stock price today. (The required rate of return is 10%.) Answer:
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Answer- Dividend = $ 1165
Rate of Return = 10%
Price of Stock = Annual Dividend / Rate of Return
Price of Stock = $ 1165/10%
Price of Stock = $ 11650.
