Question 1 (of 10) value 10.00 points Take Time Corporation will pay a dividend

Question

Question 1 (of 10) value 10.00 points Take Time Corporation will pay a dividend of $4.10 per share next year. The company pledges to increase its dividend by 6 percent per year, indefinitely. If you require a return of 10 percent on your investment, how much will you pay for the company's stock today? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Current stock price$ References Worksheet Learning Objective: 07-01 Assess how stock prices depend on future dividends and dividend growth. Difficulty: 1 Basic Section: 7.1 Common Stock Valuation Check my work

Explanation / Answer

Current stock price=Dividend for next period/(Required return-Growth rate)

=4.1/(0.1-0.06)

which is equal to

=$102.50

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