Apex Financial Ltd. is interested in investing in Scion Systems Inc. Scion's current dividend is $5.50 and

Question:

Apex Financial Ltd. is interested in investing in Scion Systems Inc. Scion's current is $5.50 and its shares are selling for $40. The required rate of return for firms like Scion is 8 percent. Apex has conducted an extensive analysis of the company and believes that the growth rate should be 5 percent.
a. Should Apex buy the stock at $40? Why or why not?
b. Do you expect the stock price to stay at $40? Explain.

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...