Question

the common stock of energizer's pays an annual dividend that is expected to increase by 10% annually. the stock commands a market rate of return of 12% and sells for $60.50 a share. what is the expected amount of the next dividend to be paid on energizer's common stock? multiple choice $.90 $1.00 $1.10 $1.21 $1.33

Answer 1

The problem requires using the Gordon growth model to find Energizer's expected next dividend, but the current dividend amount is not provided, making it impossible to determine the exact answer from the multiple choice options.

Step-by-step explanation:

The common stock of Energizer is expected to pay an annual dividend that will increase by 10% annually. The stock currently has a market rate of return of 12% and is selling for $60.50 a share. To calculate the expected amount of the next dividend to be paid, we can use the Gordon growth model which takes into account the current dividend, the growth rate, and the required rate of return. However, the problem does not provide the current dividend amount. Since we cannot calculate the expected dividend without the current dividend, we cannot accurately answer which of the multiple choice options is correct for the expected next dividend on the common stock of Energizer's.