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Acme Corporations dividends have been growing, and will continue to grow, at a constant rate, g. Two years ago, the dividend paid was D-2 =
Acme Corporations dividends have been growing, and will continue to grow, at a constant rate, g. Two years ago, the dividend paid was D-2 = $4 and the most recent dividend paid (two years later) was D0 = $3.61. If the risk-free rate RF = 5%, the expected return on the market portfolio E[RM] = 10%, and the equity beta for Acme corporation is = 1.6, calculate the current price, P0, of Acme stock.
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