Question

Thames inc.'s most recent dividend was $2.40 per share. the dividend is expected to grow at 3% per year. the t-bill rate is 5%, and the market return rate is 9%?

Answer 1

Thames inc.'s most recent dividend per share is $2.40. The present value of the stock using the dividend discount model is $80 per share.

Step-by-step explanation:

Thames inc.'s most recent dividend per share is $2.40. The dividend is expected to grow at a rate of 3% per year. To calculate the present value of the stock, we can use the dividend discount model (DDM).

DDM calculates the present value by dividing the expected dividend by the difference between the required rate of return and the dividend growth rate.

Using the DDM formula, the present value of the stock is $80 ($2.40 / (0.09 - 0.03)). Therefore, the present value of the stock is $80 per share.