Question

Asked Nov 3, 2019

Earthly Foods just paid its annual dividend of $1.45 a share. The firm recently announced that all future dividends will be increased by 2.8% each year forever. What is the fair price of the stock if an investor requires a 14% rate of return?

Group of answer choices

$12.95

$13.31

$13.68

$14.07

Step 1

We need to use dividend growth model to solve the question. It is a valuation model that determines the value of a stock using the required return and the growth rate.

Step 2

Step 3

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