Question

You’re thinking about buying the stock of food-service giant Sysco Corporation. The most recent dividend paid...

You’re thinking about buying the stock of food-service giant Sysco Corporation. The most recent dividend paid (D0) is $1.80. The current stock price is $51.84. You expect earnings and dividends to grow at a 5 percent rate over the indefinite future. If your required rate of return is 10 percent, what is the equilibrium price of the stock, or the maximum price you are willing to pay?

Group of answer choices

$51.84

$47.25

$34.22

$37.80

$30.90

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Answer #1

option (d) i.e. $37.8 is the correct answer

The given information in the question is as under-

Calculation of Equilibrium Price-

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