Answer:
$18.33
Explanation:
The company just paid an annual dividend of $2.24
The dividend increase by 2.3% annually
= 2.3/100
= 0.023
The required return is 14.8%
= 14.8/100
= 0.148
Therefore the price that will be paid for one share of LBM stock can be calculated as follows
= 2.24 × (1+0.023)/(0.148-0.023)
= 2.24 × 1.023/0.125
= 2.29153/0.125
= $18.33
Hence $18.33 will be paid for one share of LBM stock
The price that will be paid for one share of LBM stock IS $18.33.
The stock price tells you only the company's current value or its market value. Therefore, the value represents how much the stock sells — or the amount agreed upon by the buyer and seller.
Dividend is $2.24
Dividend increase by 2.3% annually that is 0.023
Return is 14.8% which will be 0.148
The price that will be paid for one share of LBM stock can be calculated as follows:
[tex]\rm\,Stock \,Price = dividend \times \dfrac{(1 + g)}{(r- g)}\\\\\rm\,Stock \,Price = 2.24 \times \frac{ (1+0.023)}{ (0.148-0.023)}\\\\= 2.24 \times \frac{1.023}{0.125} \\\\= \dfrac{2.29153}{ 0.125}\\\\= \$18.33[/tex]
Hence, $18.33 will be paid for one share of LBM stock.
To learn more about Stock price, refer:
https://brainly.com/question/1166179
