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CK Company stockholders expect to receive a year-end dividend of $5 per share and then be sold for $115 dollars per share. If the required rate of return for the stock is 20%, what is the current value of the stock

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abiolataiwo2015

Answer:

$100

Explanation:

Calculation to determine what is the current value of the stock

Using this formula

P=(Dividend sold per share*Year-end dividend)/(1+Required rate of return)

Let plug in the formula

P = (115 + 5)/(1+.2)

P = (115 + 5)/1.2

P=120/1.2

P= $100

Therefore the current value of the stock is $100

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