the expected dividend next year is 1.30 and dividends are expected to grow at 5% forever. if the discount rate is 10% what is the value of this promised dividend stream

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tatendagota tatendagota · Answer 1 · 2020-03-15T04:54:15+01:00

Answer:

$ 26.00

Step-by-step explanation:

Thinking process:

The present value is given by the following formula:

[tex]PV = \frac{C}{r-g}[/tex]

where C = $ 1.30

r = 10 %

g = 5 %

[tex]PV = \frac{1.30}{0.10 - 0.05} \\= $26.00[/tex]

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