Respuesta :
Answer:
$26.50
Explanation:
The computation of the current value of the common stock is shown below:
Current price is
= Current year dividend ÷ (Required rate of return - Growth rate)
where
Current year dividend is $1.59
The Required rate of return is 12%
ANd, the growth rate is 6%
Now place these values to the above formula
So, the current price of the common stock is
= ($1.50 × 1.06) ÷ (0.12 - 0.06)
= $1.59 ÷ 0.06
= $26.50
An amount of money that is paid by the company to its shareholders on the regular basis is called a dividend.
The current value of this common stock is $26.50.
This can be estimated by:
[tex]\text{Current price} = \dfrac{\text{Current year dividend}}{(\text{Required rate of return - Growth rate})}[/tex]
Where,
The current year interest = $1.59
The essential rate of return = 12%
The growth rate = 6%
Hence, the current value of the common stock is:
[tex]= \dfrac{(\$1.50 \times 1.06)}{(0.12 - 0.06)}[/tex]
[tex]= \dfrac{\$1.59}{0.06}[/tex]
= $26.50
Therefore, the current price of the common stock will be $26.50.
To learn more about dividend and shareholders follow the link:
https://brainly.com/question/16155930