The next dividend payment (one year from now) by Bacon Signs Inc, will be $2.50 per share. The dividends are anticipated to maintain a 2% growth rate, forever
If the required rate of return for Bacon Signs Inc is 11%, WHAT IS THE CURRENT PRICE PER SHARE:
A) $27.78.
B) $28.33.
C) $19.23.
D) $19.62.
A
Explanation: A) PV = (Div one)/(r-g) = $2.50/(.11-.02 ) = $27.78.
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