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2. (Common stock valuation, constant growth) youve discovered a company that is expected to pay $2.25 dividend at the end of this year. The dividend
2. (Common stock valuation, constant growth) youve discovered a company that is expected to pay $2.25 dividend at the end of this year. The dividend is expected to grow forever at a constant rate of 4% a year. The required rate of return for this stock is 8%. Given these conditions, what is the estimated market value per share of this stock? 3. (Common stock valuation, non-constant growth) youve discovered a company that is expected to pay $2.25 dividend at the end of this year. You estimate the companys dividends will grow 10% next year and then at a constant rate of 4% thereafter. The required rate of return for this stock is 8%. Given these conditions, what is the estimated market value per share of this stock? 4. (Issues with the dividend growth model) what are three issues that must be dealt with when evaluating stocks with the dividend growth model
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