Question

Oriole, Inc., paid a dividend of $3.95 last year. The company's management does not expect to increase its dividend in the foreseeable future. If the required rate of return is 20.0 percent, what is the current value of the stock

Answer 1

Answer: $19.75

Explanation:

The following information can be gotten from the question

Dividend = $3.95

Rae of return = 20% = 0.20

Current price=D1/(Required return-Growth rate)

= 3.95/0.20

=$19.75

The current value of the stock will be $19.75