Homework Answers
| a. | Stock Price | = | D0*(1+g)/(Ke-g) | Where, | ||||
| = | 2.00*(1+0.04)/(0.12-0.04) | D0 | = | $ 2.00 | ||||
| = | $ 26.00 | g | = | 4% | ||||
| Ke | = | 12% | ||||||
| b. | Stock Price | = | D0*(1+g)/(Ke-g) | Where, | ||||
| = | 2.00*(1+0.04)/(0.08-0.04) | D0 | = | $ 2.00 | ||||
| = | $ 52.00 | g | = | 4% | ||||
| Ke | = | 8% | ||||||
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