What is the current price of the stock?

Mathematics
Tutor: None Selected Time limit: 1 Day

 Boomer products, Inc. Manufactures "no- inhale cigarettes. As their target customers age and pass on, sales of the product are expected to decline. Thus, demographics suggest that earnings and dividends will decline at a rate of 5% annually forever. The firm just paid a dividend of $4; given required return is 10%, what is the current price of the stock.

Nov 18th, 2015

Thank you for the opportunity to help you with your question!

current price of the stock = 4*(1-5%)/(10%+5%)= 25.33

Please let me know if you need any clarification. I'm always happy to answer your questions.
Nov 18th, 2015

Did you know? You can earn $20 for every friend you invite to Studypool!
Click here to
Refer a Friend
...
Nov 18th, 2015
...
Nov 18th, 2015
Dec 4th, 2016
check_circle
Mark as Final Answer
check_circle
Unmark as Final Answer
check_circle
Final Answer

Secure Information

Content will be erased after question is completed.

check_circle
Final Answer