If expected dividends grow at 7% and the appropriate discount rate is 9%, what is the value of a stock with an expected dividend one year from now of $1.00?
A) $62.88
B) $19.41
C) $29.12
D) $50.00

Name: If expected dividends grow at 7% and the appropriate discount rate is 9%, what is the value of a stock with an expected dividend one year from now of $1.00? A) $62.88 B) $19.41 C) $29.12 D) $50.00
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Question

Quizplus · Accepted Answer

P_o = D₁ / K_e − g) = $1.00 / (0.09 − 0.07) = $50.00

If Expected Dividends Grow at 7% and the Appropriate Discount