What is the value of a share that has been paying $2 dividends with no growth prospects, and a required rate of return of 10%?
Question
Solution 1
The value of a share can be calculated using the Dividend Discount Model (DDM) when dividends are not expected to grow. The DDM formula is:
P = D / r
where: P = price of the stock D = annual dividends per share r = required rate of return
Given in the question: D = $2 (annual dividends per share) Knowee AI StudyGPT is a powerful AI-powered study tool designed to help you to solve study prob
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Knowee AI StudyGPT is a powerful AI-powered study tool designed to help you to solve study problem.
Knowee AI StudyGPT is a powerful AI-powered study tool designed to help you to solve study problem.
Knowee AI StudyGPT is a powerful AI-powered study tool designed to help you to solv
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