Answered

Find trusted answers to your questions with the help of IDNLearn.com's knowledgeable community. Our platform offers detailed and accurate responses from experts, helping you navigate any topic with confidence.

BioScience Inc. will pay a common stock dividend of $3.20 at the end of the year (D1). The required return on common stock (Ke) is 14 percent. The firm has a constant growth rate (g) of 9 percent. Compute the current price of the stock (P0).

Sagot :

Abiolataiwo2015idn

Based on the information given the current price of the stock (P0) is $64.

Current price of stock (P0)

Using this formula

Current price of stock (P0)=D1/(Ke-g)

Where:

Dividend (D1)= $3.20

Required return on common stock (Ke)= 14 percent

Constant growth rate (g)=9 percent

Let plug in the formula

Current price of stock (P0)=$3.20/(14%-9%)

Current price of stock (P0)=$3.20/5%

Current price of stock (P0)=$64

Inconclusion  the current price of the stock (P0) is $64.

Learn more about current price of the stock (P0) here:https://brainly.com/question/18522036

Thank you for contributing to our discussion. Don't forget to check back for new answers. Keep asking, answering, and sharing useful information. Accurate answers are just a click away at IDNLearn.com. Thanks for stopping by, and come back for more reliable solutions.