(SOLVED) Nyra Industries paid a $2.50 per share dividend yesterday. The dividend is expected to grow at 10% per year for the future.
Discipline: Finance
Type of Paper: Question-Answer
Academic Level: Undergrad. (yrs 1-2)
Paper Format: APA
Pages: 1
Words: 50
Question
Nyra Industries paid a $2.50 per share dividend yesterday. The dividend is expected to grow at 10% per year for the future. The company has the following:
Beta | 1.6 |
Standard deviation of returns | 30% |
Required return | 18% |
Question:
What is the value of a share of Nyra Industries common stock?
Expert Solution Preview
As per dividend discount model, current stock price is the present value of dividends which is calculated as follows:
Current Stock Price | | = | D0*(1+g)/(Ke-g) |