Question
As an investor you have a required rate of return of 10.10 percent for investments in risky stocks. You have analyzed two risky firms and
As an investor you have a required rate of return of 10.10 percent for investments in risky stocks. You have analyzed two risky firms and must decide which (if any) to purchase. Do not use the dividend growth model to answer your question. Round up your answer to 4 decimal places. Explain your answer and show the computations that justify your response.
|
| Firm B | Firm C | |
|
| Current dividends | $2.80 | $7.50 |
|
| Expected annual growth rate in dividends | 3% | (-2%) |
|
| Current market price | $45 | $60 |
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Linear Algebra And Its Applications
Authors: David Lay, Steven Lay, Judi McDonald
6th Global Edition
9781292351216
