2 A firm is planning to pay a dividend of $1.50 in a year. The growth rate of dividend is expected to be 4%a year and the required rate of retum is 99%. What is the value of this stock? Round to the nearest cent. Donot include the dollar sign in your answer. (i.e. If your answer were $123, then type 1.23 without a $ sign)

2 A firm is planning to pay a dividend of $1.50 in a year. The growth rate of dividend is expected to be 4% a year and the required rate of return is 99%. What is the value of this stock? Round to the nearest cent. Do not include the dollar sign in your answer. (i.e. If your answer were $1.23, then type 1.23 without a $ sign)

2 A firm is planning to pay a dividend of $1.50 in a year. The growth rate of dividend is expected to be 4% a year and the required rate of return is 99%. What is the value of this stock? Round to the nearest cent. Do not include the dollar sign in your answer. (i.e. If your answer were $1.23, then type 1.23 without a $ sign)

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter17: Financial Markets

Section: Chapter Questions

Problem 1SCQ: Answer these three questions about early-stage corporate finance: Why do very small companies tend...

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Similar questions

What does a share of stock represent?
Which has a higher average return over time: stocks, bands, or a savings account? Explain your answer.
If you owned a small firm that had become somewhat established, but you needed a surge of financial capital to cant out a major expansion, would you prefer to raise the funds through borrowing or by issuing stock? Explain your choice.
Explain why a financial investor in stocks cannot earn high capital gains simply by buying companies with a demonstrated record of high profits.
Answer these three questions about early-stage corporate finance: Why do very small companies tend to raise money from private investors instead of through an IPO? Why do small, young companies often prefer an IPO to borrowing from a bank or issuing bonds? Who has better information about whether a small firm is likely to earn profits, a venture capitalist or a potential bondholder, and why?
Why should a financial investor care about diversification?
Why can firms not just use their own profits for financial capital, with no need for outside investors?
Many retirement funds charge an administrative fee each year equal to 0.25% on managed assets. Suppose that Alexx and Spenser each invest 5,000 in the same stock this year. Alexx invests directly and earns 5 a year. Spenser uses a retirement fund and earns 4.75. After 30 years, how much more will Alexx have than Spenser?