Assume Evco, Inc. has a current stock price of $46.76 and will pay a $1.95 dividend in one year; its equity cost of capital is 19%. What price must you expect Evco stock to sell for immediately after the firm pays the dividend in one year to justify its current price?

Answer rating: 100% (QA)

Growth rate can be calculated by using the formula Price at year 0 year 1 dividend rate grow... View the full answer