Answer to Question #258485 in Finance for DEV

Question #258485

The company XYZ’s next year dividend per share is expected to be 4.50. The dividend in subsequent years is expected to grow at a rate of 10% per year. If the required rate of return is 15% per year, what should be its price? The prevailing market price is 80.

1
Expert's answer
2021-10-31T18:26:52-0400

price:


V0 = D1 / (Ke - g ) ;


D1 = Expected dividend next year

g = Expected growth rate in dividends

Ke = Investor’s required rate of return


"V_0=\\frac{4.5}{0.15-0.10}=90"


Need a fast expert's response?

Submit order

and get a quick answer at the best price

for any assignment or question with DETAILED EXPLANATIONS!

Comments

No comments. Be the first!

Leave a comment

Ask Your question

LATEST TUTORIALS
New on Blog
APPROVED BY CLIENTS