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Praetorian Industries will pay a dividend of $2.50 per share this year and has an an equity cost of capital of 8%. Praetorian's stock is
Praetorian Industries will pay a dividend of $2.50 per share this year and has an an equity cost of capital of 8%. Praetorian's stock is currently trading at $84 per share. By comparing Praetorian with similar firms, an investor expects that its dividends will grow by up to 5% per year. What is the best next step that the investor should take regarding Praetorian's stock? Revise her estimate of Praetorian's dividend growth. Compare Praetorian's equity cost of capital with similar firms. Sell any Praetorian stock that she owns. Revise Praetorian's equity cost of capital. Short Praetorian's stock
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