Current value of share of common stock


The Foreman Company's earnings and common stock dividends have been growing at an annual rate of 6 percent over the past 10 years and are expected to continue growing at this rate for the foreseeable future. The firm currently (that is, as of year 0) pays an annual dividend of $5 per share. Determine the current value of a share of Foreman common stock to investors with each of the following required rates of return:

a. 12 percent

b. 14 percent

c. 16 percent

d. 6 percent

e. 4 percent

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Finance Basics: Current value of share of common stock
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