Question

Apocalyptica Corp. pays a constant $4.82 dividend on its stock. The company will maintain this dividend for the next 6 years and will then cease paying dividends forever. If the required return on this stock is 11 percent, what is the current share price? Answer with 2 decimals (e.g. 45.45).

Answer 1

the current share price is $20.39

Step-by-step explanation:

The computation of the current share price is as follows:

The current share price is

= dividend per share × PVIFA factor for 11% at 6 years

= $4.82 × 4.2305

= $20.39

hence, the current share price is $20.39

we simply applied the above formula so that the correct value could come