Question

A company’s dividend growth rate is 10% the discount rate is 8%, there are 20 years of dividend to be paid and the current dividend is $10. What is the value of the stock based on the constant growth model?

Answer 1

Dividend:

It is the share of profit given by the company to the shareholders.

These dividends are usually paid in cash.

 Computation:

Answer:

• The value of the stock is $243.86