Stock AAA pays semiannual dividends. The stock has just paid a dividend, thus the next dividend...
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Stock AAA pays semiannual dividends. The stock has just paid a dividend, thus the next dividend is expected to be paid in exactly 6 months and each subsequent dividend is expected to be paid 6 months after the previous dividend. It is expected that the amount of the dividend paid 6 months from today will be $3.50 and that each subsequent dividend after the dividend coming 6 months from today will be 1.7% greater than the previous dividend. The price of the stock is $140 What is the semiannually compounded annual discount rate being used to value the stock? Stock AAA pays semiannual dividends. The stock has just paid a dividend, thus the next dividend is expected to be paid in exactly 6 months and each subsequent dividend is expected to be paid 6 months after the previous dividend. It is expected that the amount of the dividend paid 6 months from today will be $3.50 and that each subsequent dividend after the dividend coming 6 months from today will be 1.7% greater than the previous dividend. The price of the stock is $140 What is the semiannually compounded annual discount rate being used to value the stock?
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Answer rating: 100% (QA)
We can use the Dividend Discount Model DDM with constant growth to solve for the discount rate Heres ... View the full answer
Related Book For
Financial management theory and practice
ISBN: 978-1439078099
13th edition
Authors: Eugene F. Brigham and Michael C. Ehrhardt
Posted Date:
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