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Gentleman Gym just paid its annual dividend of $3 per share, and it is widely expected that the dividend will increase by 5%
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Answer #1

value = dividend next year/(Required return - growth rate)

a)

Price = 3*1.05/(0.15-0.05)

= 31.5

b)

Price = 3*1.05/(0.1-0.05)

= 63

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