JEN Corp. is expected to pay a dividend of $6.00 per year indefinitely. If the appropriate rate...

Question:

JEN Corp. is expected to pay a dividend of {eq}\$6.00 {/eq} per year indefinitely. If the appropriate rate of return on this stock is {eq}8 \% {/eq} per year, and the stock consistently goes ex-dividend {eq}20 {/eq} days before dividend payment date, what will be the expected minimum price in light of the dividend payment logistics?

Share Pricing Model:

The share price is determined under different models i.e. price-earning model, constant dividend model, increasing price-earning model, and increasing dividend model.

Answer and Explanation:

The expected minimum price in light of the dividend payment logistics per share is $75.

Explanation: The expected minimum price in light of the dividend payment logistics for per share is $75 ($6/.08), which has been computed by dividing the per-share dividend by the expected return.


Learn more about this topic:

Loading...
Pricing Objectives: How Firms Decide on a Pricing Strategy

from Business 102: Principles of Marketing

Chapter 11 / Lesson 4
27K

Related to this Question

Explore our homework questions and answers library