Question

Stoneheart Group is expected to pay a dividend of $2.93 next year. The company's dividend growth rate is expected to be 4.3 percent indefinitely and investors require a return of 10.5 percent on the company's stock. What is the stock price

Answer 1

Answer: $47.26

Explanation:

Stock price= Dividend/(Required return - Dividend growth rate)

P0 = $2.93/(0.105 - 0.043)

= $2.93/(0.062)

=$47.26