What constant growth rate in dividends is expected for a stock valued at $32.00 if next year's dividend is forecast at $2.00 and the appropriate discount rate is 12.5%? `
A. 5.00%
B. 6.25%
C. 6.75%
D. 15.38%
Gentleman Gym just paid its annual dividend of $3 per share, and it is widely expected that the dividend will increase by 5 percent per year indefinitely. If the discount rate is 15%, what should be fair price of its stock?
A. $15
B. $20
C. $31.5
D. $48.3