Question

Ambassador Corp. sells household cleaners producing a revenue stream that has remained unchanged in the last few years. The firm does not expect any change in its earnings or dividends for the next several years. The stock is currently selling at $46.88. If the required rate of return is 16 percent, what is the dividend paid by this company

Answer 1

$7.50

Step-by-step explanation:

According to the scenario, computation of the given data are as follows,

Price of stock = $46.88

Required rate = 16%

So, we can calculate the dividend by using following formula,

Dividend = Price of stock × Required rate

By putting the value, we get

Dividend = $46.88 × 16%

= $7.50

Hence, dividend paid by this company is $7.50.