Common Stock of California Corporation will pay a dividend of $8.00 in the

Business & Finance
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upcoming year, and dividends are expected to grow 5% per year in the future. Your  required rate of annual  return is 12%. Using the Constant  Dividend  Growth Model  calculate the current price of the Common Stock.

Mar 25th, 2015

Common Stock of California Corporation will pay a dividend of $8.00 in the

upcoming year, and dividends are expected to grow 5% per year in the future. Your  required rate of annual  return is 12%. Using the Constant  Dividend  Growth Model  calculate the current price of the Common Stock.

P0 = D1/(R -g)  = D0* (1+ g)/(R- g)  

$8*1.05/(.12- .05)

 $8.4/.07

 $120


Mar 25th, 2015

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Mar 25th, 2015
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Mar 25th, 2015
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