Company T will pay a dividend of $1.50 per share in the next 12 months (D1). The required rate of return (Ke) is 10% and the constant growth rate is 5 percent.

Is the correct formula and have I plugged everything in correctly?

Po = D1/Ke - g

= 1.50/10% - 5% = 30

Yes You Have Done That Correctly.

Quote:

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Originally Posted by cnichols33

Company T will pay a dividend of $1.50 per share in the next 12 months (D1). The required rate of return (Ke) is 10% and the constant growth rate is 5 percent.

Is the correct formula and have I plugged everything in correctly??

Po = D1/Ke - g

= 1.50/10% - 5% = 30

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Thanks So much bunnyKutty.. You really know your stuff.. Wish I did.. your help is appreciated!!

Kindest Regards, and I look forward to reading more of your answers.. I feel confident now.. Thanks..

You are most welcome. Prepare well for the exams and I will help you as much as I can.