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A stock is expected to pay a dividend of $8.25. These dividends are expected to grow...

A stock is expected to pay a dividend of $8.25. These dividends are expected to grow at a constant rate of 4%. What is the stock price if the required rate of return on the stock is 8%?

A. $82.50

B. $169.32

C. $206.25

D. $214.50

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Answer #1

Cost of equity = ke = D1 = 8.00% 4.0% $8.25 $206.25 8.25 = (8% -4%) Price = 01/(ke-g)

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