Question

Mannix Corporation stock currently sells for $79 per share. The market requires a return of 9.6 percent on the firm’s stock. If the company maintains a constant 2.8 percent growth rate in dividends, what was the most recent dividend per share paid on the stock? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Answer 1

Answer:

$5.23

Explanation:

The computation of the recent dividend per share is shown below:

Price of the stock = Dividend per share × (1 + growth rate) ÷ (Required rate of return - growth rate)

$79 = Dividend per share × (1 + 2.8%) ÷ (9.6% - 2.8%)

$79 = Dividend per share × (1 + 2.8%)  ÷ 6.8%

So after solving this,

The recent dividend per share is $5.23