Answer:
$40.91
Explanation:
The formula for dividend yield;
Dividend yield= Dividend per share/Share price
By putting values given in question in above formula, we get;
11%=$4.5/Share price
Share price=$4.5/.11
Share price=$40.91
Answer:
The maximum that will be paid for the stock is $40.91.
Explanation:
This can be calculated using the dividend yield formula as follows:
Dividend yield= Dividend per share ÷ Price per share ............... (1)
Where;
Dividend yield = required rate of return = 11%, or 0.11
Dividend per share = $4.50
Price per share = ?
Substituting the values into equation (1), we have:
0.11 = $4.50 ÷ Price per share
Making price per share the subject of the formula, we have:
Price per share = $4.50 ÷ 0.11 = $40.91
Therefore, the maximum that will be paid for the stock is $40.91.
