The firm has committed to a regular dividend to shareholders. The firm has declared a dividend for the next period of $1.25 per share. Analysts expect that this dividend will grow at a 2.7% rate for the foreseeable future.
You are considering an investment in the company. Similar companies are trading with a cost of equity capital of 11% per year? According to the dividend discount model, at what price would you be willing to buy a share of the company?

Answer rating: 100% (QA)

The dividend discount model can be used to calcula... View the full answer