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you are considering purchasing stock in canyon echo. you feel the company will increase its dividend at 3.4 percent indefinitely. the company just paid a dividend of $3.77 and you feel that the required return on the stock is 12.2 percent. what is the price per share of the company's stock?

Answer :

The price of share of the company's stock is =$44.2975

You're thinking about buying Canyon Echo stock. You believe the business will continue to raise its dividend at 3.4 percent.

The business recently paid a dividend of $3.77, and you believe that a 12.2 percent return on the shares is necessary.

To calculate the stock price of the company

Current price = D /(Required return-Growth rate)

Where D is the dividend

= (3.77*1.034)/(0.122-0.034)

Current price = $44.2975

Hence the current price of the stock of the company is $44.2975

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