What Should Be the Current Price of a Stock If

question 32

Multiple Choice

What should be the current price of a stock if the expected dividend is $5, 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 = 5.00/(.20 - .06)
• P = 5.00/.14

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