Bui Corp. pays a constant $13.80 dividend on its stock. The company will maintai
ID: 2735200 • Letter: B
Question
Bui Corp. pays a constant $13.80 dividend on its stock. The company will maintain this dividend for the next seven years and will then cease paying dividends forever.
If the required return on this stock is 9 percent, what is the current share price? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)
Bui Corp. pays a constant $13.80 dividend on its stock. The company will maintain this dividend for the next seven years and will then cease paying dividends forever.
Explanation / Answer
CURRENT SHARE PRICE IS PV OF ALL FUTURE DIVIDEND
= DIVIDEND * PVIFA 9%, 7 PERIODS
= $13.80 * 5.0330
= $69.45