Dorpac Corporation has a dividend yield of 1.5%. Its equity cost of capital is 8.0%, and...

Question

Question

Answer 1

Answer #1

a.

Using Constant Growth Model,

Growth Rate = r - D1/P

Growth Rate = 0.08 - 0.015

Growth Rate of Dividend = 6.50%

b.

Growth Rate of Stock Price = 0.08 - 0.065

Growth Rate of Stock Price = 1.50%

Answer 2

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