Miller Brothers Hardware paid an annual dividend of $1.55 per share last month.

Question

Miller Brothers Hardware paid an annual dividend of $1.55 per share last month. Today, the company announced that future dividends will be increasing by 3.60 percent annually. If you require a 9.5 percent rate of return, how much are you willing to pay to purchase one share of this stock today?

MC Qu. 9-A1 Miller Brothers Hardware paid... Miller Brothers Hardware paid an annual dividend of $1.55 per share last month. Today, the company announced that future dividends will be increasing by 3.60 percent annually. If you require a 9.5 percent rate of return, how much are you willing to pay to purchase one share of this stock today? O $44.61 O $43.06 O $28.77 O $25.67 O $27.22

Explanation / Answer

E. $27.22

Amount willing to pay to purchase one share of this stock today:

= $1.55(1 + 0.0360) / (0.095 - 0.0360)

= $1.6058 / 0.059

= $27.22

Related Questions

Navigate

• Browse (All)
• Browse M
• Subjects

---