Pharmecology just paid an annual dividend of $1.50 per share. It's a mature company, but future EPS and dividends are expected to grow with inflation, which is forecasted at 3.50% per year. The nominal cost of capital is 10.25%. a. What is Pharmecology's current stock price? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Answer is complete and correct. Current stock price 23.00 O b. What would be Pharmecology's current stock price using forecasted real dividends and a real discount rate? (Do not round intermediate calculations. Round your answer to 2 decimal places.) X Answer is complete but not entirely correct.
Pharmecology just paid an annual dividend of $1.50 per share. It's a mature company, but future EPS and dividends are expected to grow with inflation, which is forecasted at 3.50% per year. The nominal cost of capital is 10.25%. a. What is Pharmecology's current stock price? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Answer is complete and correct. Current stock price 23.00 O b. What would be Pharmecology's current stock price using forecasted real dividends and a real discount rate? (Do not round intermediate calculations. Round your answer to 2 decimal places.) X Answer is complete but not entirely correct.
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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B only. Thanks!
Transcribed Image Text:Pharmecology just paid an annual dividend of $1.50 per share. It's a mature company, but future EPS and dividends are expected to
grow with inflation, which is forecasted at 3.50% per year. The nominal cost of capital is 10.25%.
a. What is Pharmecology's current stock price? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Answer is complete and correct.
Current stock price
23.00 O
b. What would be Pharmecology's current stock price using forecasted real dividends and a real discount rate? (Do not round
intermediate calculations. Round your answer to 2 decimal places.)
I
8 Answer is complete but not entirely correct.
Current stock price
2$
22.12 X
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