Dividends per share are expected to grow indefinitely

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Reference no: EM13922047

XYZ company dividends per share are expected to grow indefinitely by 3% a year. Next year's dividend is $4.50 and the required rate of return (i.e. equity holder's opportunity cost of capital) is 8%. Assuming this is the best information available regarding the future of this firm, what would be the most economically rational value of the stock today (i.e. today's "price")?

A. $56.25

B. $150.00

C. $90.00

D. $92.70

E. $45.00

Reference no: EM13922047

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