Appropriate price to pay for a share of common stock

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Reference no: EM13913354

You are trying to determine the appropriate price to pay for a share of common stock. If you purchase this stock, you plan to hold it for 1 year. At the end of the year you expect to receive a dividend of $5.50 and to sell the stock for $154. The appropriate rate of return for this stock is 16 percent. What should be the current price of this stock?

A. $137.50

B. $150.22

C. $162.18

D. $98.25

Please show the calculation.

Reference no: EM13913354

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