Dietterich Electronics wants its shareholders to earn a return of 11% on their i

Question

Dietterich Electronics wants its shareholders to earn a return of 11% on their investment in the company if Dietterich Electronics had a a. $0.20 constant annual dividend forever? b. $1.20 constant annual dividend forever? c. $1.80 constant annual dividend forever? d. $3.10 constant annual dividend forever? a. The value of the stock for an investor who wants a return of 11% with a constant annual dividend of (Round to the nearest cent.) b. The value of the stock for an investor who wants a return of 1 1 % with a constant annual dividend of s (Round to the nearest cent) C. The value of the stock for an investor who wants a return of 1 1% with a constant annual dividend of (Round to the nearest cent) d. The value of the stock for an investor who wants a return of 11% with a constant annual dividend of ?(Round to the nearest cent) Enter your answer in each of the answer boxes Save for Later s of Finance -51715-FIN 3100- Wo1 - Summer 2018) is based on Brooks: Financial Management Core C on Education

Explanation / Answer

The formula to calculate the value of a stock paying constant dividends forever:

Value of stock = Annual Dividend / Required Return

a) Value of Stock = $0.20 / 0.11 = $1.82

b) Value of Stock = $1.20 / 0.11 = $10.91

c) Value of Stock = $1.80 / 0.11 = $16.36

d) Value of Stock = $3.10 / 0.11 = $28.18

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