Mountain Mining Company's coal reserves are being depleted, so its sales are falling. Also, environmental costs increase each year, so its costs are rising. As a result, the company's earnings and dividends are declining at the constant rate of 4% per year. If D0 = $4 and rs = 12%, what is the value of Mountain's stock?
Dividend yield is used to calculate the percentage return on a stock based on dividends. This is very much useful to those investrors who rely heavily on the dividends from their investments.
Answer and Explanation:
The value of Mountain's stock is 33.33
To get the value of the stock, we will use the formula of dividend yield:
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Learn more about this topic:
from Finance 101: Principles of FinanceChapter 16 / Lesson 2