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Ewald Company's current share price is 36 euros, it's last dividend was 2.40 euros. in view of Ewald's strong financial...

Ewald Company's current share price is 36 euros, it's last dividend was 2.40 euros. in view of Ewald's strong financial position and it's consequent low risk, it's required rate of return is only 12%. If dividends are expected to grow at a constant rate g in the future, and if rs is expected to remain at 12%, what is Ewald's expected price five years from now?

I am completely lost on g, how did we get 5% or 0.05? Please simplify it thanks.

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Answer #1

Market price = Current Dir. - Reg. rate of siehm € 36 € 2.40 12% (Po) (DO) (ke) As pel Constant Growth Model, Po Dollag) kerg

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