Question: Consider a firm that had been priced using an 11.5 percent growth rate and a 13.5 percent required return. The firm recently paid a $2.40

Consider a firm that had been priced using an 11.5 percent growth rate and a 13.5 percent required return. The firm recently paid a $2.40 dividend. The firm has just announced that because of a new joint venture, it will likely grow at a 12.0 percent rate.

How much should the stock price change (in dollars and percentage)?

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