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Compute the price of ecology labs common stock

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Reference no: EM133156321

Question - Ecology Labs Inc. will pay a dividend of $3.20 per share in the next 12 months (p1). The required rate of return (Ke) is 20 percent and the constant growth rate is 10 percent.

a. Compute the price of Ecology Labs' common stock.

b. Assume Ke, the required rate of return, goes up to 23 percent. What will be the new price?

c. Assume the growth rate (g) goes up to 12 percent. What will be the new price? Ke goes back to its original value of 20 percent.

Reference no: EM133156321

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