Question

A stock paid dividend of $2 at the end of the current year. Dividends will grow at the rate
of 5% indefinitely. The required rate of return of the investor is 12%. Calculate the price
of the stock at the end of 2nd
year.
A. $30.00
B. $28.571
C. $33.00
D. $33.075​

Answer 1

Explanation:

sorry brother answer nahi hai

Answer 2

Explanation:

Given A stock paid dividend of $2 at the end of the current year. Dividends will grow at the rate of 5% indefinitely. The required rate of return of the investor is 12%. Calculate the price of the stock at the end of 2nd year.

             

• Given So Dividend at the end of current year is $ 2
• So the growth rate of dividend indefinitely is 5%  
• Required rate of return of the investor = 12%
• We need to find the price of stock at the end of 2nd year  
• P = Do (1 + g)^3 / Ke – g
•     = 2 (1 + 0.05)^3 / 0.12 – 0.05
•     = 2 (1.157625) / 0.07
•     = 2.31525 / 0.07
•     = $ 33.075
• Therefore stock price at the end of 2nd year is $ 33.075

Reference link will be

https://brainly.in/question/35907549