Question 4. Stock valuation (2 points) a) Assume that a stock has the same dividend paid...

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Answer 1

Answer #1

a.Value of stock=Annual dividend/required return

=2/0.02

=$100

b.Value of stock=D1/(Required return-Growth rate)

=(1*1.02)/(0.03-0.02)

=$102

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Answer 2

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