General accounting Assume TechWave Inc. has a current stock price of $90 and willpay a $4 dividend in one year; its equity cost of capital is 11%.What price must you expect TechWave stock to sell forimmediately after the firm pays the dividend in one year tojustify its current price?

IntroductionThis question needs us to find the stock value of TechWave Inc. just after it has paid a…

Answered: Assume TechWave Inc. has a current…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter12: The Cost Of Capital

Section: Chapter Questions

Problem 19P

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Assume TechWave Inc. has a current stock price of $90 and will pay a $4 dividend in one year; its equity cost of capital is 11%. What price must you expect TechWave stock to sell for immediately after the firm pays the dividend in one year to justify its current price?