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Q2) Dividend Discount Model (DDM) a) A company just paid a dividend of D0=$5.00 on its preferred stock. The dividend amount will remain constant. The
Q2) Dividend Discount Model (DDM) a) A company just paid a dividend of D0=$5.00 on its preferred stock. The dividend amount will remain constant. The discount rate (i.e., market capitalization rate) of the company is k=8%. What is the intrinsic value of the stock P0 ? b) A company just paid a dividend of D0=$2.50. The dividend is expected to grow at a rate of g= 5% per year. The discount rate (i.e., market capitalization rate) of the company is k=6%. What is the intrinsic value of the stock P0 ? c) A company just paid a dividend of D0=$3.00. The dividend is expected to grow at a rate of g= 2% per year. The market price of the stock is P0=$30. What is the discount rate (market capitalization rate) of the stock
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