Question

What is the value of a stock that is expected to pay a constant dividend of $2 per year if the required return is 15%

Answer 1

the value of the stock is $13.33 per share

Step-by-step explanation:

The computation of the value of the stock is shown below:

The Value of the stock is

= Constant annual dividend ÷ required rate of return

= $2 ÷ 0.15

= $13.33 Per share

Hence, the value of the stock is $13.33 per share

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

And, the same is to be considered