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The common stock of Textile Mills pays an annual dividend of $1.65 a share. The company has promised to maintain a constant dividend even though economic times are tough. How much are you willing to pay for one share of this stock if you want to earn a 12 percent annual return?

Respuesta :

Answer:

$13.75

Explanation:

The following information is:

Annual dividend == $1.65 per share

And, the annual return = 12%

By using these information, we can find out the paying amount for one share which is shown below:

Paying amount = (Annual dividend ÷  Annual return) × 100

                         = $1.65 ÷ 12% × 100

                         = $13.75

We divide the annual dividend by the annual return so that per share value can arrive

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