Round Barn stock has a required return of 12.80% and is expected to pay a dividend...
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Round Barn stock has a required return of 12.80% and is expected to pay a dividend of $4.60 next year. Investors expect a growth rate of 4.20% on the dividends for the foreseeable future. a. What is the current fair price for the stock? (Round your answer to 2 decimal places.) Current fair price b. Suppose the stock is selling at this price, but then investors revise their expectations. The new expectation for the growth rate is 3.40%. If investors are rational, what will be the new price for Round Barn stock? (Round your answer to 2 decimal places.) New price Round Barn stock has a required return of 12.80% and is expected to pay a dividend of $4.60 next year. Investors expect a growth rate of 4.20% on the dividends for the foreseeable future. a. What is the current fair price for the stock? (Round your answer to 2 decimal places.) Current fair price b. Suppose the stock is selling at this price, but then investors revise their expectations. The new expectation for the growth rate is 3.40%. If investors are rational, what will be the new price for Round Barn stock? (Round your answer to 2 decimal places.) New price
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Related Book For
Intermediate Financial Management
ISBN: 978-1285850030
12th edition
Authors: Eugene F. Brigham, Phillip R. Daves
Posted Date:
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