Question

Mannix Corporation stock currently sells for $50 per share. The market requires a return of 8 percent on the firm’s stock. If the company maintains a constant 2 percent growth rate in dividends, what was the most recent dividend per share paid on the stock? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Answer 1

Answer:

DDM= D*(1+G)/R-G

50= D*(1.02)/0.06

50*0.06/1.02= D

D=$2.94

Explanation:

Answer 2

The most recent dividend per share paid on the stock is $2.94.

What is the most recent dividend paid on the stock?

The formula that would be used to determine the most recent dividend paid is:

[Price of the stock x (r - g) ] / (1 +g)

Where:

• r = interest rate
• g = growth rate

$50 x (8 - 2)

$50 x 6%

$50 x 0.06 = $3

$3 / 1.02 = $2.94

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