Merve plans to invest in a stock with dividend payouts of $2.5, $2.75 and $2.80, respectively, from year 1 to year 3. If the sell price at the end of the holding period (3rd year) is $18 and the required rate of return is 10%, what could be the purchase price (P0) of the stock?

Answer rating: 100% (QA)

To calculate the purchase price P0 of the stock we can use the dividend discount model DDM since the ... View the full answer