From schweser, Given, EPS=$6/share Current dividend rate=$3/share Estimated growth rate=6% Required rate of return=10% One-year expected sale price of stock=$35/share How much would you be willing to pay for the stock? A)31.82 B)34.54 C)34.71 D)37.60 Using DDM I get a valuation of 3(1.06)/(.1-.06)=79.50?
I get C… FV = 35 Pmt = 3 * (1.06) = 3.18 I/y = 10 n = 1 pv = 34.71
B. (3+35)/1.1
It is D/1+k + P/1+k - DDM for a holding period of one year => 3.18+35/1.1 = $34.709 - C
(3*1.06+35)/1.1=34.71 c
the answer is C nann_82 Wrote: ------------------------------------------------------- > It is D/1+k + P/1+k - DDM for a holding period of > one year => 3.18+35/1.1 = $34.709 - C thanks must have missed that
i got C as well