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White Wedding Corporation will pay a $2.65 per share dividend one year from today. The company pledges to increase its dividend by 4.75 percent per year, indefinitely. If you require a return of 11 percent on your investment, how much will you pay for the company's stock today

Respuesta :

The amount I will pay for the company's stock today is $42.40.

How much would I pay for the company's stock?

The amount I would pay for the company's stock is dependent on the value of the stock. The value of the stock can be determined using the Gordon growth model.

According to the Gordon growth model, the value of a stock is a factor of its dividend, growth rate and the rate of return.

Value of a stock = next year dividend / (rate of return - growth rate)

$2.65 / (11 - 4.75%)

$2.65 / 6.25%

$2.65 / 0.0625 = $42.40

To learn more about how to determine the value of a stock, please check: https://brainly.com/question/15710204

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