Bigtown Inc. will pay a dividend of $1.50 next year. The stock price is $13.39 currently, with a beta of 0.9. The market risk premium is 8% and the risk-free rate is 6%. What will the price of Bigtown's stock be if the dividend growth rate doubles?

$16.30 is the price

Explanation:

Firstly, we need to calculate the value of r

R = (D1/P) + g

Now, putting the figures in the above formula, we get

G = 2%

as the growth rate has doubled, then g = 4

the price of the stock = D1/(r-g) =

therefore, as per the above calculations, the price of the stock is $16.30 .

it is a i took the test.

two years ago, when picking flowers in the mountains back of yosemite valley, i found a book. it was blotted and storm-beaten; all of its outer pages were mealy and crumbly. the paper seemed to dissolve like the snow beneath which it had been buried, however; many of the inner pages were well preserved. and although all were more or less stained and torn, whole chapters were easily readable. this is the condition of the great open book of yosemite glaciers today; its granite pages have been torn and blurred by the same storms that wasted the castaway book.

two years ago, when picking flowers in the mountains back of yosemite valley; i found a book. it was blotted and storm-beaten, all of its outer pages were mealy and crumbly. the paper seemed to dissolve like the snow beneath which it had been buried, however, many of the inner pages were well preserved. and although all were more or less stained and torn; whole chapters were easily readable. this is the condition of the great open book of yosemite glaciers today, its granite pages have been torn and blurred by the same storms that wasted the castaway book.