Stock price
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A share of common stock just paid a dividend of $1.00. If the expected long-run growth rate for this stock is 5.4% and if investors required rate of return is 11.4%, what is the stock price?
a) $16.70
b) $17.13
c) $16.28
d) $18.01
e) $17.57
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The solution explains how to determine the stock price
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The stock price is the present value of all dividends. Since the dividends grow at a constant rate, we can ...
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