Round barn stock has a required return of 700 and is, Ask an Expert

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Round barn stock has a required return of 7.00% and is expected to pay a dividend of 6.85 next year. Investors expect a growth rate of 4.20% on the dividends for the foreseeable future.

What is the current fair price of the stock? (Round 2 decimal places)

Suppose the stock is selling at this price, but then investors revise their expectations. The new expectation for growth rate is 2.80. If investors are rational, what will the new price for Red Barn Stock be?

New price? (Round 2 decimal places)

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92824366

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