1. Toiletry Products, Inc. manufactures diapers. As their target customers age and pass on, salesof the product are expected to increase. Past statistics suggest that earnings and dividendswill increase at a rate of 4% annually forever. The firm just paid a dividend of $2.50. Given arequired return of 12%, the stock should sell fora $10.25b. $12.50c. $15.00d. $16.25e. $32.50

Current Dividend (D)=$2.50 Growth rate (g)=4% Required return (ke)=12% Required: Stock Price=?

Answered: 1. Toiletry Products, Inc. manufactures…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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