Constant-Growth Model. Gentleman Gym just paid its annual dividend of $2 per share, and it is widely
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Constant-Growth Model. Gentleman Gym just paid its annual dividend of $2 per share, and it is widely expected that the dividend will increase by 5 percent per year indefinitely.
a. What price should the stock sell at? The discount rate is 15 percent.
b. How would your answer change if the discount rate were only 12 percent? Why does the answer change?
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Related Book For 
Study Guide To Accompany Fundamentals Of Corporate Finance
ISBN: 9780073012421
5th Edition
Authors: Richard Brealey, Stewart Myers, Alan Marcus
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