Question

Blossom, Inc., paid a dividend of $3.50 last year. The company's management does not expect to increase its dividend in the foreseeable future. If the required rate of return is 10.0 percent, what is the current value of the stock? (Round answer to 2 decimal places, e.g. 15.25.)

Answer 1

As per dividend discount model
price today = Expected dividend next year/ (required rate - Growth rate)
Next year dividend =	3.5
Growth rate =		0%
Required rate =		10%
Price today =		$           35.00
3.5/(10%-0%)
Answer =		$           35.00