Stock Price Today and Required Rate of Return Assignment
February 18th, 2020
A&J Corporation pays a dividend today of $2.50 per stock. The company is expected to | ||||
grow at a constant rate of 5.5 percent per year forever. If the required rate of return | ||||
for this stock is 11.5 percent, how much would an investor pay for this stock today? | ||||
Part a. (5 points) |
What is the relationship between stock price today and the required rate of return? | ||||
You can use the calculations in part a to justify your answer. |
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