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36. The current price of XYZ stock is $25.00 per share. If the dividend just paid by XYZ was $1.00 i.e., Do=1.00) and if inve
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Answer #1

Price of the share = $ 25 per share

Dividend, D0 = $ 1

Cost of capital, k = 10%

Let constant growth rate be g

25 = 1*(1+g)/(0.1- g)

2.5 - 25 g = 1+g

26 g = 1.5

g = 1.5/ 26 = 5.77%

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