Kindly help me with general accounting question What would you pay for a stock which just paid a $5dividend (DO) if the expected dividend and earningsgrowth rate is 4% and you require a 16% return on yourinvestment?a. $33b. $43c. $51d. $77

To determine the price you'd be willing to pay for the stock, we use the Gordon Growth Model (or…

Answered: What would you pay for a stock which…

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 21MC

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What would you pay for a stock which just paid a $5 dividend (DO) if the expected dividend and earnings growth rate is 4% and you require a 16% return on your investment? a. $33 b. $43 c. $51 d. $77