You are evaluating a company's stock. The stock just paid a dividend of $1.75. Dividends are expected to grow at a constant rate of 5 percent for a long time into the future. The required rate of return (Rs) on the stock is 12 percent. What is the fair present value? Multiple Choice O$26.25 O $22.50 O $35.26 $50.25

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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You are evaluating a company's stock. The stock just paid a dividend of $1.75. Dividends are expected to grow at a constant rate of 5 percent for a long time into the future. The required rate of return (Rs) on the stock is 12 percent. What is the fair present value?

**Multiple Choice:**

- ○ $26.25
- ○ $22.50
- ○ $35.26
- ○ $50.25

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This text appears to be part of a financial education module, focusing on calculating the fair present value of a stock using the Dividend Discount Model (DDM). The problem requires understanding present value calculations based on dividend growth.
Transcribed Image Text:You are evaluating a company's stock. The stock just paid a dividend of $1.75. Dividends are expected to grow at a constant rate of 5 percent for a long time into the future. The required rate of return (Rs) on the stock is 12 percent. What is the fair present value? **Multiple Choice:** - ○ $26.25 - ○ $22.50 - ○ $35.26 - ○ $50.25 **Navigation:** - Previous (Page 7 of 18) - Next This text appears to be part of a financial education module, focusing on calculating the fair present value of a stock using the Dividend Discount Model (DDM). The problem requires understanding present value calculations based on dividend growth.
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