the current price of this stock
Not what you're looking for?
You are trying to determine the appropriate price to pay for a share of common stock. If you purcahse this stock, you plan to hold it for 1 year. At the end of the year you expect to receive a dividend of $5.50 and to sell the stock for $154. The appropriate rate of return for this stock is 16 percent. What should be the current price of this stock?
P0 = D1 (1+Gc)
__________
(1 + r)^1
P0 = $5.50 + $154
_____ _______
(1.16) (1.16)
P0 = $4.74 + $132.75
P0 = $128 Answer ???????
Purchase this Solution
Solution Summary
Solution contains calculations of the current price of this stock.
Solution Preview
Hello
Please see the response as below. For any further clarification feel free to contact.
Posting
You are trying to determine the appropriate price to pay for a share of common stock. If you purcahse this stock, you plan to hold it for 1 year. At the end of the year you expect to receive a dividend of $5.50 and to sell the stock for $154. The appropriate rate ...
Purchase this Solution
Free BrainMass Quizzes
Situational Leadership
This quiz will help you better understand Situational Leadership and its theories.
Introduction to Finance
This quiz test introductory finance topics.
Team Development Strategies
This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.
Marketing Management Philosophies Quiz
A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.
Income Streams
In our ever changing world, developing secondary income streams is becoming more important. This quiz provides a brief overview of income sources.