Question

Leslie's Unique Clothing Stores offers a common stock that pays an annual dividend of $3.10 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 14.50 percent on your equity investments

Answer 1

$21.38

Step-by-step explanation:

The current price to pay for one share of this stock if you want to earn a return of 14.5% on your equity investments can be calculated by dividing the annual dividend by the rate of return on equity.

Current price = Annual dividends/rate of return on equity

Current price = $3.1/0.145

Current price = $21.38