Explore BrainMass
Share

Explore BrainMass

    Dividend Discount Model: Current Market Value

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Question: Assume RHM is expected to pay a total cash dividend of $5.60 next year and its dividends are expected to grow at a rate of 6% per year forever. Assuming annual dividend payments, what is the current market value of a share of RHM stock if the required return on RHM common stock is 10%?

    © BrainMass Inc. brainmass.com October 9, 2019, 11:07 pm ad1c9bdddf
    https://brainmass.com/business/accounting-for-corporations/dividend-discount-model-current-market-value-244906

    Solution Preview

    (Dividend discount model) Assume RHM is expected to pay a total cash dividend of $5.60 next year and its ...

    Solution Summary

    This solution shows step-by-step calculations to determine the market value using the expected cash dividend, required return and growth rate.

    $2.19