Mathematics, 17.07.2019 06:27 serenityarts123
Estes park corp. pays a constant $6.95 dividend on its stock. the company will maintain this dividend for the next 12 years and will then cease paying dividends forever. if the required return on this stock is 10 percent, what is the current share price?
Answers: 1
![PV=P \left[\frac{1-(1+r)^{-n}}{r} \right]](/tpl/images/0099/1097/5bdf6.png)
![Current \ share \ price=6.95 \left[\frac{1-(1+0.1)^{-12}}{0.1} \right] \\ \\ =6.95\left[\frac{1-(1.1)^{-12}}{0.1} \right] =6.95\left(\frac{1-0.3186}{0.1} \right)=6.95\left(\frac{0.6814}{0.1} \right) \\ \\ =6.95(6.813)=\bold{\$47.36}](/tpl/images/0099/1097/0e8e4.png)
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Estes park corp. pays a constant $6.95 dividend on its stock. the company will maintain this dividen...
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