Asked by
Sharon Kwamboka
on Dec 02, 2024
Verified
What is the value of a share of Henley Inc. to an investor who requires a 12 percent rate of return if Henley's last dividend was $1.20? Assume earnings and dividends are expected to grow indefinitely at a rate of 7% per year.
A) $24.00
B) $18.34
C) $25.68
D) None of the above
Indefinitely
For an unlimited or unspecified period of time, often used in the context of contracts or agreements.
Rate of Return
The increase or decrease in the value of an investment during a set timeframe, represented as a proportion of the investment's initial expense.
- Conduct the dividend growth model analysis to evaluate a stock’s financial worth.
- Execute calculations and elaborate on the needed rate of return for a stock.
- Scrutinize how variations in dividend growth rates impact stock valuations.
Verified Answer
MR
Learning Objectives
- Conduct the dividend growth model analysis to evaluate a stock’s financial worth.
- Execute calculations and elaborate on the needed rate of return for a stock.
- Scrutinize how variations in dividend growth rates impact stock valuations.