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The Lost Continent Store pays a constant dividend. Last year, the dividend yield was 5.75 percent when the stock was selling for $67.5 a share. What must the stock price be today if the market currently requires a 5.25 percent dividend yield on this stock?

Respuesta :

Tundexi

Answer:

The stock price today must be $73.92

Explanation:

Price last year = $67.5  

Dividend yield = 5.75%  

Dividend yield = Dividend / Price of the stock

Dividend = Dividend yield * Price of the stock

Therefore,  dividend for last year = 67.5*5.75% = 3.8813

Dividend yield for now = 5.25%

Therefore price today = Dividend for last year / Dividend yield for now

= 3.8813 / 5.25%

= 73.9295

=$73.92

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