Question a share of sox- a maker of disposable socks

Economics

Question: A share of Sox- a maker of disposable socks - is expected to pay a dividend of $1.25 next year. The dividend is expected to grow 5% each year thereafter indefinitely. The appropriate discount rate for this investment is 12%. What is the value to you of one share of Sox today?

[Note: Ignore taxes.] If you could currently purchase a share of Sox for $15 in the stock market, should you do so based upon your analysis? Explain.

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Microeconomics, Economics

Category:- Microeconomics
Reference No.:- M93136374

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