What Should Be the Current Price of a Share of Stock

question 59

Multiple Choice

What should be the current price of a share of stock if a $5 dividend was just paid, the stock has a required return of 20 percent, and a constant dividend growth rate of 6 percent?

• A)$19.23
• B)$25.00
• C)$35.71
• D)$37.86 P = $5(1.06)/(.20 - .06)
• P = 5.30/.14

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