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After careful analyzing AutoZone stock, you think that it will trade for $100.00 in one year. AutoZone has announced a dividend for next year of $1.00 per share. If you want a 15.00% return on your investment this year, how much is the stock worth to you today?

Answer :

Answer:

Explanation:

You think stock will trade for $100

Next year dividend = $1

Stock today = (Future Stock price + Dividend)/(1+rate of return)

Stock today = ( 100 + 1) / (1+0.15)

Stock today = 101 / 1.15  = $87.83

The stock is worth $87.83 today

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