Question

Teder Corporation stock currently sells for $110 per share. The market requires a 10 percent return on the firm's stock. Required : If the company maintains a constant 5 percent growth rate in dividends, what was the most recent dividend per share paid on the stock?

Answer #1

**Solution:-**

**Using DDM ,**

Share value= Dividend X (1+ growth rate) / (Required rate of return - Growth rate)

**Where ,current price = $110**

**
growth rate = 5%**

**
Required rate of return = 10%**

**Substituting the values we get**

**
$110=Dividend*(1+0.05)/(0.10-0.05)**

**
Dividend= $110/21**

**
=$5.24**

**Hence the last dividend paid was = $5.24**

**Please feel free to ask if you have any query in the
comment section.**

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