Question

alarcon techware is growing quickly. dividends are expected to increase by 8 percent annually for the next three years, with the growth rate falling off to a constant 3 percent thereafter. the required return is 14 percent and the company just paid its annual dividend of $3.64 per share. what is the current share price

Answer 1

Alarcon Tech ware is growing quickly. dividends are expected to increase by 8 percent annually for the next three years, with the growth rate falling off to a constant 3 percent thereafter. the current share price is  $60.67

What is the share price?

Generally, The price at which one share of a corporation would be purchased is known as the share price or stock price. A share's price is not constant; rather, it changes over time in response to market factors. It is likely to rise if the business is seen to be performing well or decline if it isn't living up to expectations.

A share price is the cost of one equity share among many sellable shares of a corporation. The stock price, put simply, is the highest price someone is willing to pay for the stock or the lowest price at which it can be purchased.

The value of a stock is determined using the dividend valuation technique based on the dividend paid, its growth rate, and its rate of return.

To figure out how much a share is worth, use the DVM formula below.

Dividends divided by stock price ( Rate of return - Growth rate )

Stock Price =$\frac{ \ 3.64 }{ ( 14\% - 8\% )}$

Stock Price =$\frac{\ 3.64}{ 6\%}$

Stock Price = $60.67

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