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Determining the Price of Stock

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Ziggs Corporation will pay a $3.85 per share dividend next year. The company pledges to increase its dividend by 4.75 percent per year, indefinitely. Considering this, answer the following:

If you require a 12 percent return on your investment, how much will you pay for the company's stock today?

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Solution Summary

This solution illustrates how the Constant Growth Model can be used to calculate the company's stock value. All calculations, formulas and variables are described in 70 words.

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We use the the Dividend Discount (Constant Growth) Model to value the company's stock today.
Dividend Discount (Constant Growth) ...

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