Question: Use the model in File C10 to solve this problem. a. Refer to Problem 10-40. Rework part (d) using the computerized model to determine what

Use the model in File C10 to solve this problem.

a. Refer to Problem 10-40. Rework part (d) using the computerized model to determine what Swink’s expected dividends and stock price would be under the conditions given.

b. Suppose your boss regards Swink as being quite risky and believes that the required rate of return should be higher than the 12 percent originally specified. Rework the problem under the conditions given in part (d), except change the required rate of return to

(1) 13 percent,

(2) 15 percent,

(3) 20 percent to determine the effects of the higher required rates of return on Swink’s stock price.

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a INPUT DATA KEY OUTPUTS Supernormal growth 1200 Current price P 0 3150 Normal growth rate 400 Price at the end of Year 5 4009 Req rate of return 1200 Dividend yield in Year 1 622 Last dividend D 0 17... View full answer

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