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2. To iliustrate the process of valuing common shares, you are asked to analyze the Bon Temps: Company, an employment agency that supplies word processors

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2. To iliustrate the process of valuing common shares, you are asked to analyze the Bon Temps: Company, an employment agency that supplies word processors and computer programmers to other businesses to help their permanent staffs meet temporary heavy workloads. You are to answer the following questions: a) What formula can be used to value any share, regardless of its dividend pattern? What is a constant-growth share? How are constant-growth shares valued? b) Assume that Bon Temps is a constant-growth stock company with kt=16 percent and last dividend (D0, which was paid yesterday) was $2.00. The dividend is expected to grow at a 6 percent rate. What is Bon Temps's current share value? What is the share's expected value in one year? What are the expected dividend yield and the capital gains yield for the current year? c) What would Bon Temps's slock be worth if its dividends were expected to have zero growth

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