B. IZZY Company paid dividends to its common stockholders at P2.75 per share on December 31, 2018. The common stock of IZZY is selling in the market at P67.90 per share. The dividend growth rate of the company is 5.6% and the required rate of return of the common stock is 7.5%. Required: 1. Using the discounted dividend model, how do you compute the market price of the common stock? 2. Will an investor consider buying the common stock of IZZY at 963 90 per share?
B. IZZY Company paid dividends to its common stockholders at P2.75 per share on December 31, 2018. The common stock of IZZY is selling in the market at P67.90 per share. The dividend growth rate of the company is 5.6% and the required rate of return of the common stock is 7.5%. Required: 1. Using the discounted dividend model, how do you compute the market price of the common stock? 2. Will an investor consider buying the common stock of IZZY at 963 90 per share?
Chapter2: The Domestic And International Financial Marketplace
Section: Chapter Questions
Problem 6P
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