Stock XYZ declares a dividend of $2 per share and is currently valued at $125 in the market. Based on the stock's dividend history, a broker determines a dividend growth rate for the stock of 5% per year and a discount rate of 7%.

I.  Calculate the stock current value 

II.  What would be your recommendation to investors holding this stock 

C.  Sea Gardens is a resort company with average risk. The industry average Price-earnings ratio (P/E) for resort companies is 13. If Sea Gardens has earnings per share (EPS) of $1.70.

What would be a fair price for its shares?

Answer rating: 100% (QA)

I To ascertain the ongoing worth of the stock we can utilize the profit rebate model DDM equation The DDM equation is Current Stock Worth Profit per O... View the full answer