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Now suppose that prevailing market interest rates go up to 10%. How much do I need to raise my promised dividend payment in order to
Now suppose that prevailing market interest rates go up to 10%. How much do I need to raise my promised dividend payment in order to keep the share price at $25 per share based on Equation 6.2? P=rd where: P= stock per share d= annual dividend per share r= interest rate you could earn on other investments If my gas station stock sells for $25, and I am only paying a dividend of $1 per share annually, what is the implied interest rate that investors seem willing to accept based on Equation 6.2
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