Determine the market price of a share of common stock one year from today (which means you want to find P₁) if the most recently paid dividend was $9.75 per share (DIV₀ = $9.75). In this problem please assume that the firm's dividends will grow at a constant rate of 12% per year (g = 0.12) and the required rate of return on equity is 17% (so r_E = 0.17).

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The formula for the dividend discount model is P1 DIV1 rE g where DIV1 is the next yea... View the full answer