Question
A stock has a fair value of $37.50. Investors require a 10% return and the company is expected to pay a $1.50 dividend next year
A stock has a fair value of $37.50. Investors require a 10% return and the company is expected to pay a $1.50 dividend next year that is anticipated to grow by 6% per year forever. If the growth assumption is correct and the stock is priced correctly, what will be the price of the shares 10 years from now?
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Options Futures and Other Derivatives
Authors: John C. Hull
10th edition
013447208X, 978-0134472089
