Question

Leslie's Unique Clothing Stores offers a common stock that pays an annual dividend of $2.60 a share. The company has promised to maintain a constant dividend. How much are you willing to pay for one share of this stock if you want to earn a return of 13.80 percent on your equity investments

Answer 1

$18.84

Step-by-step explanation:

The amount i would be willing to pay is the present value of the dividend payment

Present value =
`(dividend)/(r)`

r = interest rate

2.6 / 0.1380 = $18.84