Question
Marble Corporation's ROE is 17%. Their dividend payout ratio is 20%. The last dividend, just paid, was $2.58. Dividends are expected to grow by the
Marble Corporation's ROE is 17%. Their dividend payout ratio is 20%. The last dividend, just paid, was $2.58. Dividends are expected to grow by the company's sustainable growth rate indefinitely.
a. What is the current value of Marble common stock if its required return is 18%?
b. If expected dividend is $3, your required rate of return of 18%, you buy the stock at $50. What is the constant dividend growth rate?
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Small Business Management Launching and Growing New Ventures
Authors: Justin Longenecker, Leo Donlevy, Terri Champion, William Petty, Leslie Palich, Frank Hoy
6th Canadian edition
176532218, 978-0176532215
