Sterling Corp. paid a dividend of $.80 last year. Over the next 12 months, the dividend is
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Sterling Corp. paid a dividend of $.80 last year. Over the next 12 months, the dividend is expected to grow at a rate of 10 percent, which is the constant growth rate for the firm (g). The new dividend after 12 months will represent D1. The required rate of return (Ke) is 14 percent. Compute the price of the stock (P0).
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
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Related Book For 
Foundations of Financial Management
ISBN: 978-0077454432
14th edition
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen
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