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Leona [35]
3 years ago
5

2 annual dividend on its common stock. The dividend is expected to increase at 6% per year indefinitely. If the required rate of

return is 16%, what is the stock's value?
Business
1 answer:
mixer [17]3 years ago
5 0

Solution:

Given,

R= 16%

g= 8%

Calculate stock value ,

D_{1}=D_{0} x (1+g) ;

D1= 2.16

P0= ( 2.16/0.16 )-0.08

P0= $27

A value stock is a lower price protection exchange that can otherwise be implied by the performance of the company.

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