Homework Answers
4.Value of stock is equal to present value of perpetuity
= Expected Dividend/(Required Return - growth rate)
53 = 3.15/(12%-growth rate)
Growth Rate = 6.06%
5.
65 = D1/(11%-4.5%)
D1 = 4.225
D0 = 4.225/(1.045)
= $4.043
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