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Braxton's Cleaning Company stock is selling for $32.60 a share based on a rate of return of 13.8 percent. What is the amount of the next annual dividend if the dividends are increasing by 2.4 percent annually

Respuesta :

Answer:

$3.72      

Explanation:

Data provided in the question

Stock selling price = $32.60

Rate of return = 13.8%

Dividend increased percentage = 2.4%

So, the next dividend is

As we know that

Price of the stock = (Next year dividend) ÷ (Required rate of return - growth rate)

$32.60 = (Next year dividend) ÷ (13.8% - 2.4%)

$32.60 = Next year dividend ÷ 11.4%

So, the next year dividend is

= $3.72

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