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Valero paid a dividend of $1.28 this morning. as per the management discussion and the financial...

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Finance

Valero paid a dividend of $1.28 this morning. as per themanagement discussion and the financial position of the company,dividend next year is expected to be higher by 2%. after that youexpect the dividend to grow at a flat of 1.0% forever. if therequired rate of return is 7.8%, what should be the post-dividendstock price?

A. 19.20

B. 18.82

C. 22.07

D. 19.40

Answer & Explanation Solved by verified expert
4.2 Ratings (607 Votes)
Calculation of Post dividend stock price Year Dividend Present value factor 78 Present Value 1 131 092764 121 PV of future dividends see working 1939 092764    See Answer
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Valero paid a dividend of $1.28 this morning. as per themanagement discussion and the financial position of the company,dividend next year is expected to be higher by 2%. after that youexpect the dividend to grow at a flat of 1.0% forever. if therequired rate of return is 7.8%, what should be the post-dividendstock price?A. 19.20B. 18.82C. 22.07D. 19.40

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