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Stock Price using Dividend Discount Model (DDM)

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8. The FI Corporation's dividends per share are expected to grow indefinitely by 5% per year.

a. If this year's year-end dividend is $8 and the market capitalization rate is 10% per year, what must the current stock price be according to the DDM?
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Solution Summary

Stock price has been calculated using Dividend Discount Model for constant growth rate in dividends.

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8. The FI Corporation's dividends per share are expected to grow indefinitely by 5% per year.

a. If this year's year-end dividend is $8 and the ...

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