(SOLVED) Nyra Industries paid a $2.50 per share dividend yesterday. The dividend is expected to grow at 10% per year for the future.

Discipline: Finance

Type of Paper: Question-Answer

Academic Level: Undergrad. (yrs 1-2)

Paper Format: APA

Pages: 1 Words: 50

Question

Nyra Industries paid a $2.50 per share dividend yesterday. The dividend is expected to grow at 10% per year for the future. The company has the following:


Beta
1.6

Standard deviation of returns

30%

Required return

18%


 Question:


What is the value of a share of Nyra Industries common stock?


Expert Solution Preview


As per dividend discount model, current stock price is the present value of dividends which is calculated as follows:


Current Stock Price
 = 
D0*(1+g)/(Ke-g)