Coyote Beauty Products just paid a dividend of $10 (i.e., D0 = 10.00). Its divid

Question

Coyote Beauty Products just paid a dividend of $10 (i.e., D0 = 10.00). Its dividends are expected to grow at a 5% annual rate forever. If you require a 12% rate of return on investments of this risk level, what is the most you should pay for a share of Coyote's stock?
Coyote Beauty Products just paid a dividend of $10 (i.e., D0 = 10.00). Its dividends are expected to grow at a 5% annual rate forever. If you require a 12% rate of return on investments of this risk level, what is the most you should pay for a share of Coyote's stock? Coyote Beauty Products just paid a dividend of $10 (i.e., D0 = 10.00). Its dividends are expected to grow at a 5% annual rate forever. If you require a 12% rate of return on investments of this risk level, what is the most you should pay for a share of Coyote's stock?

Explanation / Answer

Todays Stock Price = $10 * (1 + 0.05) / (0.12 - 0.05) = $150

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