Question

Thereafter, management expects the dividend growth rate to be constant at 6 percent. If the required rate of return is 22.00 percent, what is the current value of the sto? (Round all intermediate calculations and final answer to 2 decimal places, e.g. 15.20.) Current value fyou would like to Show Work for this question:

Answer 1

To calculate the current value of a stock, you can use the dividend growth model.

Step-by-step explanation:

To calculate the current value of a stock, you can use the dividend growth model, which is the formula: Current Value = Dividend / (Required Rate of Return - Dividend Growth Rate). In this case, management expects the dividend growth rate to be constant at 6 percent and the required rate of return is 22 percent. Therefore, the current value of the stock can be calculated as follows:

Current Value = Dividend / (Required Rate of Return - Dividend Growth Rate)

= Dividend / (0.22 - 0.06)

= Dividend / 0.16

Since the dividend is not given in the question, it is not possible to calculate the exact current value of the stock without that information.