One company has just paid a quarterly dividend of $0.60. İt's stock price is $63.20, and the company is expected to grow at a 4% rate. It has 500,000 shares outstanding, and its capital stack consists of a 60% debt, 40% equity split. If the company increases its quarterly dividend by $.20, which leads to an Re of 8.4%, what is the new stock price?

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
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One company has just paid a quarterly
dividend of $0.60. İt's stock price is $63.20,
and the company is expected to grow at a 4%
rate. It has 500,000 shares outstanding, and
its capital stack consists of a 60% debt, 40%
equity split.
If the company increases its quarterly
dividend by $0.20, which leads to an Re of
8.4%, what is the new stock price?
Transcribed Image Text:One company has just paid a quarterly dividend of $0.60. İt's stock price is $63.20, and the company is expected to grow at a 4% rate. It has 500,000 shares outstanding, and its capital stack consists of a 60% debt, 40% equity split. If the company increases its quarterly dividend by $0.20, which leads to an Re of 8.4%, what is the new stock price?
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