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Constant growth rate of dividends model

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Reference no: EM133253570

Steven Corporation paid dividends per share of $3.56 in Year 1, and dividends are expected to grow 3.5% a year for ever. The stock has a beta of 0.90, and the risk-free rate and the market risk premium in the economy are 4% and 6% respectively.

What is the value per share using the constant growth rate of dividends model?

If the stock was trading for $40 a share, what is the implied growth rate in dividends?

Reference no: EM133253570

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