Use the Gordon growth model formula to compute the price of a stock that will pay a $5 dividend per share next year and the dividend is expected to stay at $5 forever. Assume 5% cost of equity. The price of the stock today is $

the price of the stock today is $100

Explanation:

The computation of the price of the stock  today is shown below:

Given that

D1 = 5

Growth Rate = 0%

Cost of Equity = 5%

Now the price of the stock today  is

= D1 ÷ Cost of Equity

= $5 ÷ 5%

= $100

Hence, the price of the stock today is $100

We simply applied the above formula so that the correct value could come

And, the same is to be considered

the correct answer is economics is a game without winners or losers.

unlike sports or games economic is a game without losers or winner rather it is a game where everyone wins. parties of business doing businesses exchange money with each other and hence exchange is done on the basis of goods. one party takes the goods and other sales it so there is winner on both sides. each party values more highly the good it gets than the good it gives up. both sides exchange only because both intend to increase their value. so there is no concept of lose or win.