A company just paid dividends of $2.75 per share. The company has a constant growth of 5.5%.

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A company just paid dividends of $2.75 per share. The company has a constant growth of 5.5%. The risk-free rate is 2.5%, beta is 0.90 and market return of 8%. The stock is selling at $75.50.

a. Determine the rate of return on equity.

b. What is the stock price after a year?

Related Book For answer-question

Foundations Of Finance

ISBN: 9781292155135

9th Global Edition

Authors: Arthur J. Keown, John D. Martin, J. William Petty

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Posted Date: Mar 15, 2024 10:22 AM

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A company just paid dividends of $2.75 per share. The company has a constant growth of 5.5%.

Question:

Expert Answer:

To calculate the rate of return on equity a we can use the Dividend Discount Model DDM assuming the ... View the full answer

Foundations Of Finance

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