40. (LO 7.3) Investors demand a rate of return of 15 percent on Sweet Life Food...

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40. (LO 7.3) Investors demand a rate of return of 15 percent on Sweet Life Food Incls common shares. These shares are current

business finance

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Answer 1

Answer #1

a.

Using Constant Growth Model,

g = 0.15 - 1/20

g = 10.00%

b.

Stock price = 1/0.15

Stock Price = $6.67

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Answer 2

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