Consider the DDM valuation of a matured (stable growth) public utility company, Power Ltd. In its most
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Question:
Consider the DDM valuation of a matured (stable growth) public utility company, Power Ltd. In its most recent financial statements, the company reported an EPS of $1.00 and paid a dividend per share (DPS) of $0.80. The company's payout ratio is constant, ROE = 7.5%, and cost of equity = 7.45%. Power's current stock price in the market is $12.53. Estimate the implied growth rate (in DPS) that is incorporated in Power's current market share price.
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