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A company has just paid a dividend of 3.6$. Its discount rate is 10.5%, and the expected perpetual growth rate is 3.1%....

A company has just paid a dividend of 3.6$. Its discount rate is 10.5%, and the expected perpetual growth rate is 3.1%. What would you expect to be the stock's price TODAY?

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Answer #1

Stock price = D1 / required rate - growth rate

Stock price = [3.6(1 + 3.1%)] / 0.105 - 0.031

Stock price = 3.7116 / 0.074

Stock price = $50.16

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