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Corporate Finance · End Term · 21 Dec 2025 · September 2025 term

Question 10: The current market price of a stock is Rs 400. Next year…

Question 10

+3 marksOne correct option

The current market price of a stock is Rs 400. Next year's expected dividend is Rs 25 per share. The dividend growth rate is expected to be 4% per year forever, and the required rate of return is 8%. According to the Gordon Growth Model, what is the estimated fair price of the stock?

  1. A

    Rs 312.5

  2. B

    Rs 400

  3. C

    Rs 500

  4. D

    Rs 625

Show answer

Correct answer

  • D

    Rs 625

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Question 10 of 30 in the IIT Madras BS Corporate Finance (Corporate Finance) End Term paper sat on 21 Dec 2025, in the September 2025 term (Corporate Finance 18 Dec 25). It carries 3 marks.

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