MMK Cos. normally pays an annual dividend. The last such dividend paid was $1.7, all future dividends
Question:
MMK Cos. normally pays an annual dividend. The last such dividend paid was $1.7, all future dividends are expect to grow at a rate of 8 percent per year, and the firm faces a required rate of return on equity of 21 percent. If the firm just announced that the next dividend will be an extraordinary dividend of $26.5 per share that is not expected to affect any other future dividends.
Required:
What should the stock price be? (Round your answer to 2 decimal places. Omit the "$" sign in your response.)
Stock price $
Last dividend.... $1.70
Growth rate..... 8%
Required rate of return. 21%
Dividend next year... $26.50
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...
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Related Book For
Finance Applications and Theory
ISBN: 978-0077861681
3rd edition
Authors: Marcia Cornett, Troy Adair
Question Posted: