Problem
A share of Sox- a maker of disposable socks - is expected to pay a dividend of $1.25 next year. The dividend is expected to grow 5% each year thereafter indefinitely. The appropriate discount rate for this investment is 12%. What is the value to you of one share of Sox today?
[Note: Ignore taxes.] If you could currently purchase a share of Sox for $15 in the stock market, should you do so based upon your analysis? Explain.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.