Cascade Industries Inc intends to pay a common stock dividend of $3.18 one year from today and the firm anticipates that the dividend will continue to grow at a rate of 2% per year indefinitely
If the firm has a 13% required rate of return, what is the current price per share of stock?
A) $21.20
B) $28.91
C) $21.62
D) $29.49
B
Explanation: B) PV = (Div one)/(r-g) = $3.18/(.13-.02 ) = $28.91.
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