07-20-2014, 08:34 PM
Trying to get started studying for the DSST for Principles of Finance. Came across this, and could not figure out what the answer was, or for that matter, what formula I would use here (tried the Gordon Growth Model and promptly got lost:
"A firm has common stock outstanding that paid a $2 dividend last year. This stock has a 6% expected growth rate. If you have a 10% required rate of return, what is the most you should pay for this stock?"
Thanks.
"A firm has common stock outstanding that paid a $2 dividend last year. This stock has a 6% expected growth rate. If you have a 10% required rate of return, what is the most you should pay for this stock?"
Thanks.