Question
Asked Jun 21, 2019
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Ferradini company's stock has a required rate of return of 12.50% and it sells for $18.00 per share. Ferradini's dividend is expected to grow at a constant rate of 7.00%. what was the last dividend?

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Expert Answer

Step 1

Formula to calculate the last dividend:

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DJ (k-g) Do(1+g) (k-g) Where Do denotes the last or recent dividend g denotes the expected growth rate k, denotes the required rate

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Step 2

Calculation of last divide...

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Do(1+g) (k-g) $18=(1+0.07) (0.1250-0.07) Do (1.07) $18= (0.055) s0.99 Do(1.07) Do $0.93

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