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Sid's Video Store will pay an annual dividend of $2.15 next year. The company just announced that subsequent future dividends will be increasing by 1.5 percent annually. How much are you willing to pay for one share of this stock if your required return is 14 percent

Respuesta :

The amount of money that I would be willing to pay for one share of the stock of Sid's Video Store is $17.20.

What is the value of the stock?

The amount I would be willing to pay for the stock would be based on the value of the stock.

Value of the stock = dividend that would be paid next year / ( required return - growth rate)

$2.15 / (14% - 1.5%)

$2.15 / 12.5% = $17.20

To learn more about how to determine the value of a stock, please check: https://brainly.com/question/18648993

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