Using the one-period valuation model,assuming a year-end dividend of $0.11,an expected sales price of $110,and a required rate of return of 10%,the current price of the stock would be
A)$110.11.
B)$121.12.
C)$100.10.
D)$100.11

Question

Quizplus · Accepted Answer

To calculate the current price of the stock using one-period valuation model, we use the following formula:
Current price = Dividend / (1 + Required Rate of Return) + Expected Sales Price / (1 + Required Rate of Return)
Current price = 0.11 / (1 + 0.10) + 110 / (1 + 0.10) = $100.10
Therefore, the correct answer is option C.

Using the One-Period Valuation Model,assuming a Year-End Dividend of $0