Hardwoods, Inc. is a mature manufacturing firm. The company just paid a $10 dividend, but management expects to reduce the payout by 9 percent each year, indefinitely. How much are you willing to pay today per share to buy this stock if you require a 15 percent rate of return

$37.92 is the answer

Explanation:

Stock price, P0 = D1÷(r+g)

D1 is next expected dividend

r is required return

g is growth rate

= $10×(1-9%)÷(15%+9%)

= $37.92

$37.92

Explanation:

D0 = $10

g = -9% it is negative since the payout will be reduced indefinitely

r =15%

P = ?

dividend discount model

P = D1/r-g

  = 10 (1+(-0.09))/0.15-(-0.09)

   =$37.9167/$37.92

because she sucked. : )

(but so does trump, don't @ me)

month 1 start amount =$3287.90 interest=(3287.90x0.0145/12)3.97 total to pay=$3291.81 paid =$1200 balance =$2,091.87

month 2 starting amount= $2,091.87 interest =$25.28 total to pay =$2117.15 paid =$1200 balance $917.15

month 3 starting amount =$917.15 interest =$11.08 total to pay =$928.23 paid =$928.23 balance =$0 total to pay 1200+1200+928.23 = $3328.23 it will take 3 months to pay a total of $3328.23