SOLUTION: A shoe company just paid a dividend of $1.65 on its common stock. This companys dividens are expected to grow at a constant rate of 3% indefinitely. If the required rate of return

Question 76212: A shoe company just paid a dividend of $1.65 on its common stock. This companys dividens are expected to grow at a constant rate of 3% indefinitely. If the required rate of return on this stock is 11%, compute the current value per share of this stock.
A. $15.00
B. $20.63
C. $21.25
D. $55.00
I didnt get any of the options above, I came closest to C but not exactly.
Answer by scott8148(6628) (Show Source): You can put this solution on YOUR website!
the 3% growth rate is a smokescreen (spurious information)

let x=share value...if rate of return is 11% and the dividend is $1.65 then .11x=1.65..or x=$15.00
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