Question

Stoneheart Group is expected to pay a dividend of $2.87 next year. The company's dividend growth rate is expected to be 4 percent indefinitely and investors require a return of 10.2 percent on the company's stock. What is the stock price?

Answer 1

Answer:

The share price = $46.29

Explanation:

The share price = Next year dividend / (Required return - Growth rate)

The share price = 2.87 / (0.102 - 0.04)

The share price = 2.87 / 0.062

The share price = 46.29032258064516

The share price = $46.29