Company XYZ's dividend of $1.50 is expected be 5% higher next year, and after that the dividend is expected to grow at a constant 1.4% onto perpetuity. Assuming a cost of equity of 12%, using the Gordon growth model, what should the stock be worth today? Possible answers: A)$18.9/share B) $14.2/share C) $14.9/share D) $19.7/share

Company XYZ's dividend of $1.50 is expected be 5% higher next year, and after that the dividend is expected to grow at a constant 1.4% onto perpetuity. Assuming a cost of equity of 12%, using the Gordon growth model, what should the stock be worth today? Possible answers: A)$18.9/share B) $14.2/share C) $14.9/share D) $19.7/share

Name: Company XYZ's dividend of $1.50 is expectedbe 5% higher next year, an
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Description: Company XYZ's dividend of $1.50 is expectedbe 5% higher next year, and after that thedividend is expected to grow at a constant1.4% onto perpetuity. Assuming a cost ofequity of 12%, using the Gordon growthmodel, what should the stock be worthtoday?P

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter8: Basic Stock Valuation

Section: Chapter Questions

Problem 2P

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