Tresnan Brothers is expected to pay a $3.40 per share dividend at the end of the year (i.e., D1 = $3.40). The dividend is expected to grow at a constant rate of 8% a year. The required rate of return on the stock, rs, is 11%. What is the stock's current value per share? Round your answer to the nearest cent

Tresnan Brothers is expected to pay a $3.40 per share dividend at the end of the year (i.e., D1 = $3.40). The dividend is expected to grow at a constant rate of 8% a year. The required rate of return on the stock, rs, is 11%. What is the stock's current value per share? Round your answer to the nearest cent

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter8: Basic Stock Valuation

Section: Chapter Questions

Problem 2P

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Question

Tresnan Brothers is expected to pay a $3.40 per share dividend at the end of the year (i.e., D₁ = $3.40). The dividend is expected to grow at a constant rate of 8% a year. The required rate of return on the stock, r_s, is 11%. What is the stock's current value per share? Round your answer to the nearest cent

Definition Definition Percentage gain or loss from a specific investment over time. The rate of return is the difference between the closing and initial values of an investment divided by the initial value of the investment. The closing value includes any intermediate cash flows such as dividends or interest amounts.

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