A company has expected earnings next year of $6 and pays 50% of its earnings every year as dividends. It has an expected rate of return of 7.6% and return on reinvestment of 7.6%. Calculate the value of its stock. Then recalculate its stock price when the return on reinvestment is 9%.

Answer rating: 100% (QA)

To calculate the value of the companys stock we can use the dividend discount model which states tha... View the full answer