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Posted by: Homeworkhelp
Price Quoted by Student: $1.5
Posted On: 2011-05-29 08:08:03
 
Question

A10. (Dividend discount model) Assume RHM is expected to pay a total cash dividend of $5.60 next year and its dividends are expected to grow at a rate of 6% per year forever. Assuming annual dividend payments, what is the current market value of a share of RHM stock if the required return on RHM common stock is 10%?

 

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Return on common stock r = (D1/ P0) + g Current p
Price $1.5
Attachment 1: A10. (Dividend discount model).xls
Solution Posted By: Homeworkhelp    Posted on: 29-05-2011