ABC common stock just paid a dividend of $9.75 per share. Dividends are paid annually. Two...
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ABC common stock just paid a dividend of $9.75 per share. Dividends are paid annually. Two different analysts are valuing ABC's stock. The analyst working for New Bank believes that the required rate of return on the stock is 17.1%. The analyst working for Old Bank believes that the required rate of return on stock is 15.7%. In addition, the analyst working for New Bank believes that the dividends will grow by 9.5% per year. The analyst working for Old Bank believes that the dividends will grow by 9.8% per year. What will be the amount of the difference in their value estimates for ABC's common stock? ABC common stock just paid a dividend of $9.75 per share. Dividends are paid annually. Two different analysts are valuing ABC's stock. The analyst working for New Bank believes that the required rate of return on the stock is 17.1%. The analyst working for Old Bank believes that the required rate of return on stock is 15.7%. In addition, the analyst working for New Bank believes that the dividends will grow by 9.5% per year. The analyst working for Old Bank believes that the dividends will grow by 9.8% per year. What will be the amount of the difference in their value estimates for ABC's common stock?
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Answer rating: 100% (QA)
We can use the Gordon Growth Model to calculate the value estimates for ABCs ... View the full answer
Related Book For
Corporate Finance
ISBN: 978-0077861759
10th edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe
Posted Date:
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