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Value a Constant Growth Stock Financial analysts forecast Best Buy Company (BBY) growth for the future...

Value a Constant Growth Stock Financial analysts forecast Best Buy Company (BBY) growth for the future to be 16.00 percent. Their recent dividend was $1.79. What is the value of their stock when the required rate of return is 17.23 percent?

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Answer #1

value = dividend next year/(Required return - growth rate)

=>

value of stock = 1.79 * 1.16/(0.1723-0.16)

= 168.81

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