Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. common stock valueconstant growthpersonal finance

Common stock valueConstant growthPersonal Finance ProblemOver the past 6 years, Elk County Telephone has paid...

70.2K

Verified Solution

Question

Finance

Common stock

valueConstant

growthPersonal Finance ProblemOver the past 6 years, Elk County Telephone has paid the dividends shown in the following table,

LOADING...

. The firm's dividend per share in

2023

is expected to be

$4.02.

a.If you can earn

14%

on similar-risk investments, what is the most you would be willing to pay per share in

2022,

just after the

$3.83

dividend?b.If you can earn only

11%

on similar-risk investments, what is the most you would be willing to pay per share?

c.Compare your findings in parts a and b, what is the impact of changing risk on share value?

a.If you can earn

14%

on similar-risk investments, the most you would be willing to pay per share is

$nothing.

(Round to the nearest cent.)b.If you can earn

11%

on similar-risk investments, the most you would be willing to pay per share is

$nothing.

(Round to the nearest cent.)c.According to the findings in parts a and b, as risk decreases, the required rate of return

increases

increases

decreases

, causing the share price to

rise

fall

rise

. (Select from the drop-down menus.)

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students