Weisbro and Sons common stock sells for $21 a share and pays an annual dividend that increases by 5 percent annually. The rate of return on this stock is 9 percent. What is the amount of the last dividend paid?
Added by Theresa C.
Step 1
In this case, we know that P = $21, r = 9% or 0.09, and g = 5% or 0.05. We need to find D, the dividend paid in the next year. So, we can rearrange the formula to solve for D: D = P * (r - g). Show more…
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