Answer to Question #176777 in Financial Math for Nick Desrosiers

Question

Abel, Inc. just paid a dividend of $3.0 per share and you think they will continue to pay $3.0 per year indefinitely.  If the appropriate discount rate is 11%, how much should the price of a share be? (Answer to the nearest penny.)

Answer 1

Price of share=per year payment/discount rate

$=3/0.11=27.27272727$

$$27$