单选题
Use the following information and the dividend discount model to find the value of GoFlower, Inc. "s, common stock?
Last year"s dividend was $ 3.10 per share.
The growth rate in dividends is estimated to be 10 percent forever.
The return on the market is expected to be 12 percent.
The risk-free rate is 4 percent.
Go Flower"s beta is 1.1.
【正确答案】
A
【答案解析】The required return for Go Flower is 0.04+1.1×(0.12-0.04)=0.128 or 12.8%. The expect dividend is $3.10×1.10=$3.41. Go Flower"s common stock is then valued using the infinite period dividend discount model (DDM) as $3.41/(0.128-0.10)=$121.79.