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Unformatted text preview: 35070 Queston: How much are you willing to pay for one share of J.M. Smucker Co. stock if the company just paid a $0.70 annual dividend, the dividends increase by 3.0 percent annually, and you require a 10 percent rate of return? Answer: Share price = D 1 / (R e- G) Where D 1 is the dividend for next year = $0.70 x 1.03 = $0.721 R e = 10% and G = 3% So, Share price = 0.721 / (0.10 - 0.03) = $10.30....
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- Spring '15
- Accounting, raw material, $7, 3rd millennium, $10.30, $0.721, 0.50 G