Suppose the expected Dl is $2, the growth rate is 5 percent and Rs is 10%. Using the constant growth model what is the price? What is the impact on stock price if g is 4% or 6%? If Rs is 9 or 11%
If a stock pays an annual dividend of $5 and the issue price was $50 per share. What is the expected rate of return to an investor on this preferred stock?© BrainMass Inc. brainmass.com March 4, 2021, 6:22 pm ad1c9bdddf
Po = D1 / (Rr - g) = 2/ (10%-5%) = $40
When g = ...
The expert uses the constant growth model to determine what is the price.