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A firm pays a $2.50 dividend at the end of year one. It has a share price of $100 (Po) and a constant growth rate
A firm pays a $2.50 dividend at the end of year one. It has a share price of $100 (Po) and a constant growth rate (9) of 7 percent. a. Compute the required (expected) rate of return (K). (Do not round intermediate calculations. Round the final answer to 2 decimal places.) Required rate of return % Also indicate whether each of the following changes would make the required rate of return (K) go up or down. (In each question below, assume only one variable changes at a time. No actual numbers are necessary.) b. If the dividend payment increases; Ke will go up. O ke will go down ke remains constant. c. If the expected growth rate increases; Ke will go up. Ke will go down O ke remains constant. d. If the stock price increases; O ke will go up. O ke will go down O ke remains constant
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