Question

Ryder Supplies has its stock currently selling at $63.25. The company is expected to grow at a constant rate of 7 percent. If the appropriate discount rate is 17 percent, what is the expected dividend, a year from now?a) 4.43 b) 3.25 c) 10.75 d) 6.33

Answer 1

Answer:

d) 6.33

Explanation:

The computation of the expected dividend a year from now is shown below:

As we know that

Price of the stock =  Expected dividend ÷ (Required rate of return - growth rate)

Expected dividend = Price of the stock ×  (Required rate of return - growth rate)

= $63.25 × (0.17 – 0.07)

= $6.325

hence, the correct option is d. $6.33

We simply applied the above formula so that the correct value could come

And, the same is to be considered