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Investors require an 8% rate of return on Mather Company's stock (i.e., rs=8% ). a. What is its value if the previous dividend was D0=$1.25
Investors require an 8% rate of return on Mather Company's stock (i.e., rs=8% ). a. What is its value if the previous dividend was D0=$1.25 and investors expect dividends to grow at a constant annual rate of (1) 3%, (2) 0%, (3) 2%, or (4) 7% ? Do not round intermediate calculations. Round your answers to the nearest cent. (1) $ (2) $ (3) $ (4) $ b. 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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