Fink Corp. will pay a $2.40 dividend in the next 12 months. The required rate of return is 13% and the constant growth rate is 5%. Address the following: 

1. What is the stock price? 

2. If the required rate of return goes up to 16%, and all else remains the same, what will be the stock price? 

3. Assume that the next dividend to be paid is $2.70 and the required rate of return is 11% and the growth rate is 6%, what is the price of stock?

Answer rating: 100% (QA)

To find the stock price we can use the Gordon Growth Model also known as the Dividend Discount Model ... View the full answer