Wesen Corp. will pay a dividend of $4.30 next year. The company has stated that it will maintain a constant growth rate of 4.75 percent a year forever.
If you want a return of 16 percent, how much will you pay for the stock? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Current stock price $
If you want a return of 12 percent, how much will you pay for the stock? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Current stock price $
References
eBook & Resources
WorksheetLearning Objective: 07-01 Assess how stock prices depend on future dividends and dividend growth.
Difficulty: 1 Basic