The last dividend (Div0) is $1.80, the growth rate (g) is 6%, and the required rate of return (r) is 12%. What is the stock price according to the constant growth dividend model?
A) $31.80
B) $30.80
C) $30.00
D) $15.00
Answer: A
Explanation: A) The Dividend Growth Model states that P0 = .
Inserting our values gives: P0 = = = = $31.80.
You might also like to view...
The U.S. Supreme Court case, PGA Tour Inc. v. Martin (2001) involved a challenge to PGA Tour rules under what statute?
A. Amateur Sports Act B. Title VII of the Civil Rights Act of 1964 C. Americans with Disabilities Act D. Age Discrimination in Employment Act
How did the Sarbanes-Oxley Act strengthen auditor independence?
a. By requiring auditors to provide reports in accordance with the Foreign Corrupt Practices Act. b. By requiring auditors to report the nature of any auditor-client disagreements to the SEC. c. By requiring the lead partner to rotate off the audit engagement at least every five years. d. By requiring a different audit firm from the one that performs the audit to prepare the client's tax return.