1. Suppose an investor is considering the purchase of a share of the Utah Mining Company. The...
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1. Suppose an investor is considering the purchase of a share of the Utah Mining Company. The stock will pay a $3 dividend a year from today. This dividend is expected to grow at 10 percent per year (g = 10%) for the foreseeable future. The investor thinks that the required return (r) on this stock is 15 percent, given her assessment of Utah Mining’s risk. (We also refer to r as the discount rate of the stock.) What is the value of a share of Utah Mining Company’s stock?
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Corporate Finance
ISBN: 9780071229036
6th International Edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe
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