A firm pays a $1.50 dividend at the end of year one. it has a share price
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A firm pays a $1.50 dividend at the end of year one. it has a share price of $60 (P0) and a constant growth rate (g) of 9 percent.
a. Compute the required (expected) rate of return (K.). Also indicate whether each of the following changes would make the required rate of return (K.) go up or down.
(In each question below, assume only one variable changes at a time. No actual numbers are necessary.)
b. The dividend payment increases.
c. The expected growth rate increases.
d. The stock price increases.
DividendA dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
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Related Book For
Foundations Of Financial Management
ISBN: 9781259265921
11th Canadian Edition
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta
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