1. Suppose XZY Corp. just paid a dividend of $0.60. The firm has a payout ratio of 20%, and its dividends are expected to grow in perpetuity at 16%. You estimate that its market capitalization rate is 17%.
(a) At what price should the stock of XZY sell if it is priced by the constant dividend growth model?
(b) Decompose the price into PVGO and the present value of Assets-in-Place.
[Your question was edited to accord with eNotes policy of not answering multiple questions. Staff]
0 Answers | Be the first to answer
We’ve answered 315,489 questions. We can answer yours, too.Ask a question