Question

Cox Footwear pays a constant annual dividend. Last year, the dividend yield was 3.2 percent when the stock was selling for $35a share. What is the current price of the stock if the current dividend yield is 2.9 percent?a $18.92 b $38.62 c $25.20 d $26.87 e $27.40

Answer 1

The current price of the stock is b. $38.62

Step-by-step explanation:

Hi, in order to find the current price of the stock, first we need to find the amount paid as a constant dividend, the formula is as follows.

`DivYield=(Dividend)/(Price)`

So, things should look like this

`0.032=(Dividend)/(35)`

`Dividend=0.032*35=1.12`

So the amount of constant dividend tha this company is paying is $1.12/share

Now we can find the current price using the same equation and solving for "Price",

`0.029=(1.12)/(Price)`

`Price=(1.12)/(0.029) =38.62`

Therefore, the current price of the stock is $38.62, that would be option b.

Best of luck: