Question
Asked Oct 2, 2019

Mannix Corporation stock currently sells for $27 per share. The market requires a return of 10.8 percent on the firm’s stock. If the company maintains a constant 3.4 percent growth rate in dividends, what was the most recent dividend per share paid on the stock? 

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Expert Answer

Step 1

Dividend is the amount paid by the company from the profit to the share holders of the company. Dividend can be paid to the preference shareholders and equity shareholders. Preference is given to the preference shareholders while distributing the dividend.

Step 2

Given:

Current stock price=$27

Required rate of return=10.8%

Growth rate (constant)=3.4%

 

Step 3

Formula to calculate div...

Dividend per share Curent price (Required rate - growth rate)
-$27(.108-034)
=$1.99 or $2
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Dividend per share Curent price (Required rate - growth rate) -$27(.108-034) =$1.99 or $2

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