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Please help with all parts of this question thank you As companies evolve, certain factors can drive sudden growth. This may lead to a period
Please help with all parts of this question thank you
As companies evolve, certain factors can drive sudden growth. This may lead to a period of non constant, or variable, growth. This would cause the expected growth rate to increase or decrease, thereby affecting the valuation model. For companies in such situations, you would refer to the variable or non constant, growth model for the valuation of the company's stock. Consider the case of Portman Industries. Portman Industries just paid a dividend of $3.12 per share. The company expects the coming year to be very profitable, and its dividend is expected to grow by 20.00% over the next year. After the next year, though, Portman's dividend is expected to grow at a constant rate of 4.00% per year. Investors expect a required rate of return of 12.20% on Portman's stock. Assuming that the market is in equilibrium, use the information just given to complete the table. Portman has 700,000 shares outstanding, and Judy Davis, an investor, holds 10.500 shares at the current price as just found. Suppose Portman is considering issuing 87, 500 new shares at a price of $38.82 per share. If the new shares are sold to outside investors, by how much will Judy's investment in Portman be diluted on a per-share basis? $0.76 per share $1.60 per share $0.65 per share $0.93 per share Thus, Judy's investment will be diluted, and Judy will experience a total loss ofStep by Step Solution
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