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stock is expected to pay a dividend of ​$86 per share. The consensus of investors is that these dividends will increase at a rate of 4 percent per year for the indefinite​ future, and the interest rate is 15 percent.

Answers

Answer 1

The consensus of investors is that these dividends will increase at a rate of 4 percent per year for the indefinite​ future, and if the interest rate is 15 percent, then the price of a stock should be  $781.81.

What is a Stock?

A stock may be defined as a type of security that significantly demonstrates the ownership of a fraction of the issuing corporation. It is a general term that typically describes the ownership certificates of any company.

The formula for calculating the price of a stock is as follows:

PV = 86/i-k

where, i = 15 and k = 0.04 (4 percent per year).

     = 86/0.15-0.04 = 86/0.11 = 781.81 $.

where PV is the present value of the future payments, i is the interest rate and k is the annual increase.

Therefore, the price of a stock is $781.81.

To learn more about Stocks, refer to the link:

https://brainly.com/question/25300925

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The complete question is as follows:

You are considering purchasing stock. The stock is expected to pay a dividend of ​$86 per share. The consensus of investors is that these dividends will increase at a rate of 4 percent per year for the indefinite​ future, and the interest rate is 15 percent. The price of the stock should be ​$ ________.

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