Question: Consider a firm that had been priced using a 1 0 percent constant growth rate and a 1 4 percent required rate. The firm recently

Consider a firm that had been priced using a 10 percent constant growth rate and a 14 percent required rate. The firm recently paid a $1.00 dividend. The firm has just announced that because of a new joint venture, it will likely change the growth rate to 12 percent constant growth rate. How much should the stock price change (in dollars and percentage)? Hint: First calculate the values of the stock with old and new g and compare their values to calculate the percentage change.

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