Question: Show your work: Star Manufacturing is expected to pay a dividend of $1.20 per share at the end of the year (D1 = $1.20). The

Show your work:

  • Star Manufacturing is expected to pay a dividend of $1.20 per share at the end of the year (D1 = $1.20). The stock sells for $30 per share, and its required rate of return is 10.5%. The dividend is expected to grow at some constant rate, g, forever. What is the equilibrium expected growth rate?

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