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Assumptions: 1. In Jan 2001, Stock A paid a quarterly dividend of 0.33$. The total dividend paid in 2001 is ($0.33+$0.33+$0.33+0.33 = $1.32) 2. Quarterly
Assumptions: 1. In Jan 2001, Stock A paid a quarterly dividend of 0.33$. The total dividend paid in 2001 is ($0.33+$0.33+$0.33+0.33 = $1.32)
2. Quarterly Dividend remains constant for the year. In other words, dividend grows/changes after every 4 quarters.
3. Quarterly Dividend is paid on the 1st of April, June, September, and January.
4. Expected Annual return Ke = 7%
5. Growth g = 5% per annum
Use g from Gordon Growth Model ( Po = D1/ (Ke -g)) to estimate the price of stock A on 1 Dec 2001
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