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Investors require a 7% rate of return on Mather Company's stock (i.e., r s = 7%). What is its value if the previous dividend was
Investors require a 7% rate of return on Mather Company's stock (i.e., rs = 7%).
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What is its value if the previous dividend was D0 = $1.50 and investors expect dividends to grow at a constant annual rate of (1) -7%, (2) 0%, (3) 4%, or (4) 6%? Do not round intermediate calculations. Round your answers to the nearest cent.
(1) $
(2) $
(3) $
(4) $
- Using data from part a, what would the Gordon (constant growth) model value be if the required rate of return was 8% and the expected growth rate was (1) 8% or (2) 12%? Round your answers to the nearest cent. If the value is undefined, enter N/A.
(1) $
(2) $
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