Using the Gordon growth formula, if D₁ is $2.00, k_e is 12 percent or 0.12, and g is 10 percent or 0.10, then the current stock price is ________. A) $20 B) $50 C) $100 D) $150

Name: Using the Gordon growth formula, if D 1 is $2.00, k e is 12 percent or 0.12, and g is 10 percent or 0.10, then the current stock price is ________. A) $20 B) $50 C) $100 D) $150
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Question

Quizplus · Accepted Answer

The Gordon growth formula is P = D1 / (ke - g). Substituting the given values: P = 2 / (0.12 - 0.10) = 2 / 0.02 = $100.

Using the Gordon Growth Formula, If D1 Is $2

Using the Gordon Growth Formula, If D₁ Is $2