The next dividend (Div1) 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: C
Explanation: C) The Dividend Growth Model states that P0 = .
Inserting our values gives: P0 = = = $30.00.
Business
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