Cow Company will pay a $3.00 dividend next year, Dividends are expected to grow at a constant rate of 5% per year. If the required return for this stock is 12%, how much should the stock sell for today?

Cow Company will pay a $3.00 dividend next year, Dividends are expected to grow at a constant rate of 5% per year. If the required return for this stock is 12%, how much should the stock sell for today?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter8: Basic Stock Valuation

Section: Chapter Questions

Problem 2P

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Cow Company will pay a $3.00 dividend next year,
Dividends are expected to grow at a constant rate of
5% per year. If the required return for this stock is
12%, how much should the stock sell for today?

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