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International Buff Enterprise (IBE) is expected to pay a dividend of $2 next year, $2.5 in the second year, and to grow the dividend at
International Buff Enterprise (IBE) is expected to pay a dividend of $2 next year, $2.5 in the second year, and to grow the dividend at a constant growth rate of 2% starting in year 3. If the required rate of return for IBE is 6%, what is the intrinsic value of a share of IBE under the dividend discount model? (Hint: Draw a timeline.)
A. | $63.75 | |
B. | $56.73 | |
C. | $60.85 | |
D. | $62.50 |
Given an Annual Percentage Rate (APR) of 8% with quarterly compounding, the equivalent interest rate for effective annual rate is ____%.
A. | 8.0% | |
B. | 1.8% | |
C. | 2.0% | |
D. | 8.2% |
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