Leslie\'s Unique Clothing Stores offers a common stock that pays an annual divid
ID: 2632132 • Letter: L
Question
Leslie's Unique Clothing Stores offers a common stock that pays an annual dividend of $3.50 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 11.80 percent return on your equity investments?
Leslie's Unique Clothing Stores offers a common stock that pays an annual dividend of $3.50 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 11.80 percent return on your equity investments?
$15.30 $8.30 $3.37 $41.30 $29.66Explanation / Answer
It is a perpetuity with annual payments of 3.50 at 11.80%
Price = Present Value of perpetuity = 3.5/0.1180 = 29.66
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.