8-14B. (Common stock valuation) The common stock of KPD paid $1 in dividends last year. Dividends are
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8-14B. (Common stock valuation) The common stock of KPD paid $1 in dividends last year.
Dividends are expected to grow at an 8 percent annual rate for an indefinite number ofyears.
a. IfKPD's current market price is $25, what is the stock's expected rate of return?
b. Ifyour required rate of return is 11 percent, what is the value of the stock for you?
c. Should you make the investment?
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Related Book For 
Financial Management Principles And Applications
ISBN: 9780131450653
10th Edition
Authors: Arthur J. Keown, J. William Petty, John D. Martin, Jr. Scott, David F.
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