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Martha and Patty each are considering investing in Colo Corp. Both of them agree that next year's dividend will be $2.20 per share and that
Martha and Patty each are considering investing in Colo Corp. Both of them agree that next year's dividend will be $2.20 per share and that dividends will grow at 3% in perpetuity. However, Martha has a required return of 12.4% while Patty has a required return of 9.2%. Assuming the stock of Colo Corp is correctly priced using the constant-growth dividend discount model, should either of the potential investors purchase shares in the market for $29.50 ? Yes oniy Martha thoukd buy thares Ves, both Patty and Martha should buy thares No, neither Patty or Martha thould buy shares Tes. onvy Patyy stould buy shares
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